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Learning the Everything: 2015


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Learning the Everything: 2015

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  #1 (permalink)
 jackbravo 
SF, CA/USA
 
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Well, it's 2015, and I'm still trading, and have lost yet even more money about 17.5K down so far. Here is my last journal.

I'm such as freaking addict. The good news is that I feel like I have a much better handle on price action, with trading the micro-euro futures. I'm still trying to figure out when to use price action, because it seems in a trend environment, following price action gets me out too early, and causes slippage/commissions to go way up. In a trend environment, figuring out the market context seems to be the most important factor. In a non-trending enviroment, price action becomes the dominant decision maker.

I'm still having issues jumping in at the end of the move, which burns up some of my profits from taking the move in the first place. I need to work on that. I've also determined that scalping too short of a term can kill any profits I might have gained, very quickly.

Instead of posting trades here, I'm going to post some of my thoughts on what's going on with the market, so I can back later and see what I was thinking, right or wrong. Here's to an educational 2015.

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  #3 (permalink)
 jackbravo 
SF, CA/USA
 
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In thinking about the market, I would like to develop a fundamental view that I use to trade the price action. From reading the ES thread, I know that I'm far away from really understanding all the moving parts and how they fit together. I'm not sure whether to be heartened or disheartened by the fact that it seems many people who have been trading for several years also don't seem to have every put together. Anyway, here are some thoughts, many of which may be contradictory. Really, this is just an exercise for myself:

FUNDAMENTALS

Positive
1] The economy has been on a general uptrend, despite whatever manipulations are going on with the numbers. I know this because I can see in my line of work a significant amount of job openings compared to 2 years ago, something like 2-3x.
2] With the rest of world's economy slumping, the differential is positive for US stocks
3] The bond market seems to be at the top of a bubble. With the FED possibly/probably increasing interest rates soon, there's a high interest rate risk, which will mean a large sell-off in bonds. This is bullish for stocks.
4] Looks like more Japan QE might be coming. Weaker yen is bullish for stocks.
5] ECB QE is likely bullish for US
6] Race to negative interest rates around the world makes the US the destination for yield
7] Seasonality, including 2015, post-midterm elections, is positive for the year

Negative
1] A deflationary world economy might have deleterious effects on US economy.
2] Crashing oil and commodity prices suggest decreased demand for stuff. People can't afford to buy stuff??


TECHNICAL

Positive
1] Cumulative TICK is increasing suggesting buying across the board


2] McClellan oscillator, though has been in a downtrend, is starting to point up


3] ES 1960 support has been holding strong



Negative
1] Increased volatility in overbought long term conditions suggest market is topping. Since the December, the 21DEMA of VIX has been steadily increasing




2] Weakness on the monthly charts, with that doji at the top


3] DAX has been making lower highs and lower lows recently.


4] Gold has bounced off its bottom, making an inverted head and shoulders, with support around 1180.



SENTIMENT

1] Market sentiment seems to be neutral, with lower put/call ratio of around 0.67
2] Tiger is bullish, which suggests the institutions are likely bullish as well.

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 jackbravo 
SF, CA/USA
 
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Looks like today puts us back in the trading range. The main questions I have been asking myself:

Is there any impetus to buy equities right now?

Yes
Bonds are currently high risk, low yield.
Gold has a lot of pressure on it, and no yield.
Oil is wild.
Economic numbers are great.
Incoming global QE
Where else are you going to put your money, cash?
Positive cumulative tick

No
Dollar may be hurting earnings this year.
High risk global environment.
Classic market leaders like oil, yield, and dry shipping suggest a decline imminent.
VIX is staying high, though under 20

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 fminus 
Washington DC
 
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you're looking at a ton of stuff. i don't want to steer you away from your method but once upon a time i was looking at too many things too. this is just a suggestion so you can take it with a grain of salt but you might want to have a process of how you organize these views and a way for these views becoming actionable.

For instance, every morning I look at the fundamental and big picture (weekly and daily charts); big picture fundamentals pointing up but we're now back in a range from a rejection on Friday. Coupled with the negative news out of Greece we're probably going back down to the bottom of range at 1980. probably safe to trade short with all the fear in the market.

Followed by the immediate term 60 min charts where i focus strictly on globex highs/lows, previous day highs/lows, and major swings. It doesn't have to be these, you can put up pivots if you want and just trade these. Trade only these areas to prevent you from taking emotionally-driven or adrenaline-junkie trades. Remember these areas and ingrain in your brain.

Short term, when price reaches these areas and present favorable price action, go for it.

I know I just did a hand wave overview that might not make sense but you really want to be a sniper in the markets. 1) know what continent you're on 2) know where your enemy is and 3) now you look through your scope and go for the kill. Just my 2 cents FWIW.

In trading, shortcuts lead to the longest path possible.
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fcb98292
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Jackbravo,

I could not keep my eye on all that you have there. My eyes would have fallen out long ago, even before LCD screens were invented. Best of luck in your trading.

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 jackbravo 
SF, CA/USA
 
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fminus View Post
you're looking at a ton of stuff. i don't want to steer you away from your method but once upon a time i was looking at too many things too. this is just a suggestion so you can take it with a grain of salt but you might want to have a process of how you organize these views and a way for these views becoming actionable.

For instance, every morning I look at the fundamental and big picture (weekly and daily charts); big picture fundamentals pointing up but we're now back in a range from a rejection on Friday. Coupled with the negative news out of Greece we're probably going back down to the bottom of range at 1980. probably safe to trade short with all the fear in the market.

Followed by the immediate term 60 min charts where i focus strictly on globex highs/lows, previous day highs/lows, and major swings. It doesn't have to be these, you can put up pivots if you want and just trade these. Trade only these areas to prevent you from taking emotionally-driven or adrenaline-junkie trades. Remember these areas and ingrain in your brain.

Short term, when price reaches these areas and present favorable price action, go for it.

I know I just did a hand wave overview that might not make sense but you really want to be a sniper in the markets. 1) know what continent you're on 2) know where your enemy is and 3) now you look through your scope and go for the kill. Just my 2 cents FWIW.

yea, I definitely need more organization. I haven't traded the ES for a while now due to account drawdown. So I'm just exercising my thought process. Thanks for your suggestions.

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 jackbravo 
SF, CA/USA
 
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fcb98292 View Post
Jackbravo,

I could not keep my eye on all that you have there. My eyes would have fallen out long ago, even before LCD screens were invented. Best of luck in your trading.

I guess I should get more than one screen.

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 fminus 
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jackbravo View Post
yea, I definitely need more organization. I haven't traded the ES for a while now due to account drawdown. So I'm just exercising my thought process. Thanks for your suggestions.

I'm sorry to hear that.


jackbravo View Post
I guess I should get more than one screen.

Ok 1 more screen maybe but there is no direct correlation with more monitors making you more profitable. It might help to prevent flipping charts and the ease just looking and seeing what you need, but it's more of a convenience thing.


I looked over your journal and you have to pick your spots to trade wisely. If you're finding yourself on the wrong side of trades or confused which way to trade, try this:

- Create a weekly chart and put 5, 20, 50, 100, 200 MAs of your choice. Are we 1-time framing or in a range?
- Create a daily chart and put 5, 20, 50, 100, 200 MAs of your choice. Are we 1-time framing or in a range?

Which way is the wind blowing? Not which way do you think it's going to go, I mean in the here and now which way is it going? Only trade long when above 5ma. Only trade short when below 5ma. And if we're in a range just trade both ends of the range.

I hope you don't take my simple advice as offensive, but sometimes the simplicity is key. Too much complicated charts and crap all over the place and either 1) your brain will ignore it or 2) you'll have analysis paralysis and not pull the trigger when you need to or 3) confuse yourself and find yourself trading the middle of nowhere wondering why the hell you took a trade.

Hope this helps.

In trading, shortcuts lead to the longest path possible.
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 jackbravo 
SF, CA/USA
 
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fminus View Post

I looked over your journal and you have to pick your spots to trade wisely. If you're finding yourself on the wrong side of trades or confused which way to trade, try this:

- Create a weekly chart and put 5, 20, 50, 100, 200 MAs of your choice. Are we 1-time framing or in a range?
- Create a daily chart and put 5, 20, 50, 100, 200 MAs of your choice. Are we 1-time framing or in a range?

Which way is the wind blowing? Not which way do you think it's going to go, I mean in the here and now which way is it going? Only trade long when above 5ma. Only trade short when below 5ma. And if we're in a range just trade both ends of the range.

I hope you don't take my simple advice as offensive, but sometimes the simplicity is key. Too much complicated charts and crap all over the place and either 1) your brain will ignore it or 2) you'll have analysis paralysis and not pull the trigger when you need to or 3) confuse yourself and find yourself trading the middle of nowhere wondering why the hell you took a trade.

Hope this helps.


No offense taken at all. I appreciate all advice. I actually have those MAs (5, 21, 50 ema; 50, 125, 200 ma) on my longer term charts. I've getting killed I think because I'm trading too short of a time-frame - so for example, longer time frame is up, but the day is down - and i'm trading during the day, so i'm watching every tick against me and freaking out.

Trading the m6e has really really helped with trading longer time frames, since you can't scalp that contract due to slippage and percentage of commission to tick size. I'm still a long way from being very profitable, but there's a new issue which has cropped up that's taking away the profit. After a multi-day trade where I've made maybe 150pips, I'll revert back to short-time frame trading and wipe away all my profit within 20minutes. Plus take a loss. It's crazy, and goes to show me that my instinct to trade shorter time frames is completely wrong. So I'm trying to get over that, seeing if maybe momentum (range) bars might be more helpful to push to longer time frame trading.

Thanks again for your commments!

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 jackbravo 
SF, CA/USA
 
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I have no specific bias towards the market at the moment. There's too many moving parts for me to put together in a clear picture. However, given volatility is low, price is at extremes, there's a higher risk that volatility will expand then contract, which increases risk to the downside compared to the upside.

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 jackbravo 
SF, CA/USA
 
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It strikes me that I'm too much of a coward to be a really great trader. I think that I can be a scalper, but to really be a trader....I'm not sure I have the cohones for it. Today being a case-in-point, in fact a second example in as many weeks, where I had 20 ES cars long at 63, kept holding on to it through the downside to 55s before FOMC, then FOMC hit, got out at 65.......when the right trade would've been to hold on to it, as it just kept rallying to ~100. I'm not really sure how to improve this.

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 US Bond Trader 
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jackbravo View Post
It strikes me that I'm too much of a coward to be a really great trader. I think that I can be a scalper, but to really be a trader....I'm not sure I have the cohones for it.

A scalper is a trader. There is no shame in being a good scalper. Many of the best traders are scalpers. You don't hear much about them because they don't get the 8 figure paydays like traders at banks or hedge funds make. Its more glamorous to read about a trader pulling down a $50 million dollar bonus than the scalper who pulls in only a million or two a year or even makes a comfortable living making a few hundred thousand a year. Scalpers grind out their earnings with consistency not necessarily catching a monster move.

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 US Bond Trader 
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jackbravo View Post
where I had 20 ES cars long at 63, kept holding on to it through the downside to 55s before FOMC, then FOMC hit, got out at 65.......when the right trade would've been to hold on to it, as it just kept rallying to ~100. I'm not really sure how to improve this.

That is something you have to work on. Maybe since you took so much heat (from 63 down to 55) that once it started coming back you felt relief instead of thinking the worst is over now lets ride this trade and you only got out a couple of ticks from your entry. Is it psychological, probably more so than cowardice. Taking some heat initially in a trade will make you rethink everything. If it was cowardice, you probably would have gotten out at 55 because your thinking would be all messed up and you don't want to make it worse. I don't know if you have a trading plan, like when you get in at 63, do you think it is going to say 85? If you did, then why would you get out at 65 instead of letting it go up?

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 jackbravo 
SF, CA/USA
 
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US Bond Trader View Post
That is something you have to work on. Maybe since you took so much heat (from 63 down to 55) that once it started coming back you felt relief instead of thinking the worst is over now lets ride this trade and you only got out a couple of ticks from your entry. Is it psychological, probably more so than cowardice. Taking some heat initially in a trade will make you rethink everything. If it was cowardice, you probably would have gotten out at 55 because your thinking would be all messed up and you don't want to make it worse. I don't know if you have a trading plan, like when you get in at 63, do you think it is going to say 85? If you did, then why would you get out at 65 instead of letting it go up?

When I got in at 63, I was looking to the 70s. When the heat started though, especially after two fails right at 70, I started to rethink my hypothethis, and thought maybe I read the market wrong. Since most FOMC days spike up then back down, my line of thinking was I'll use the FOMC spike to get out at break even then reassess the market. Which is what I did.

The question is , should I have gotten back in when I saw that it wasn't just a spike but the start of something, or should I have not wavered from original market interpretation? I'm not sure. I'm wrong quite a lot, so my confidence regarding my assessment is low.

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 zander931 
Portland, OR, US
 
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jackbravo View Post
When I got in at 63, I was looking to the 70s. When the heat started though, especially after two fails right at 70, I started to rethink my hypothethis, and thought maybe I read the market wrong. Since most FOMC days spike up then back down, my line of thinking was I'll use the FOMC spike to get out at break even then reassess the market. Which is what I did.

The question is , should I have gotten back in when I saw that it wasn't just a spike but the start of something, or should I have not wavered from original market interpretation? I'm not sure. I'm wrong quite a lot, so my confidence regarding my assessment is low.

If the hypothesis of your trade is incorrect, get flat. Waiting for the post-FOMC action, in hopes of getting out at break-even, is craziness, imo.

Also, you had twenty lots on? (SIM?)

Either way, it sounds like a bit much considering your (admitted) lack of experience.

Why toss out such a big line if you, yourself, know you aren't experienced enough to trade profitably?

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 US Bond Trader 
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Trading on FOMC days is always tricky because literally the entire world is waiting to hear what Yellen will say. You are going to have big spikes immediately afterward. In today's case, your analysis was already bullish pre-FOMC, you were long and Yellen's comments came out which were supportive to your position then the reason for you being in the trade in the first place is still valid so you should have stayed in the position.

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 jackbravo 
SF, CA/USA
 
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zander931 View Post
If the hypothesis of your trade is incorrect, get flat. Waiting for the post-FOMC action, in hopes of getting out at break-even, is craziness, imo.

Also, you had twenty lots on? (SIM?)

Either way, it sounds like a bit much considering your (admitted) lack of experience.

Why toss out such a big line if you, yourself, know you aren't experienced enough to trade profitably?

I'm trading 1 lot/~10K in my IRA account, which I figured is a reasonable ratio. But maybe that ratio is still too much.

Really I should have been flat yesterday after taking a bit of profit, then waited for FOMC.

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 jackbravo 
SF, CA/USA
 
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What a day today. It's never as successful as I imagine it would have been in retrospect. I just have too much of an itchy trigger finger. Out of 110 points on the NQ today, I got about 40, and all I had to do was just wait to exit at the end of the day to get the Benjamin. That's disappointing. I figure that if I'm really going to take advantage of futures trading, I have to be able to make 20% of my account on days like this, to equilibrate all the money lost on chop during the rest of the month. At 1 car/10K, that's achievable. Now I just have to recognize the day for what it is and nail my hands to my chair.

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 jackbravo 
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Looking at the overall map, it seems the market has been ranging since about October. The range has been pretty wide, about 150pts ES, but I'm not sure what to make of it. Is this a market top range or is this a consolidation for a continuation. Given the incoming rate hikes and high dollar, it seems like we're due for a correction. While the US economy is a bright spot in the global environment, QE in other locales such as Europe and Japan make their stock markets more attractive I would think. So why invest in US stocks when you get a much higher return in other countries? It's also more expensive to buy US stocks if you have to convert into dollars.

Regarding bonds, incoming interest rate hikes should be bearish for bonds. At the same time, there's a large differential between the US interest rates and other world interest rates, which is bullish for bonds. I'm not really sure who would win.

My bias is definitely short stocks, uncertain bonds, bullish USD. Is the strong US tech sector sufficient to prop up the market?

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 jackbravo 
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annnnd....once again, correct read on the market, too chickenshit to stick with the read in advance of an event. literally got out of the best position possible 7 minutes before....cost me about 15K in opportunity costs. i just have so little confidence in myself. I got back in of course but 14 ES points lower than where I was !

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 MacroNinja 
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Out of curiosity, how much risk in $'s would you have needed to put on the table to realize the full $15k in missed opportunity costs?

Have you considered possibly expressing part of your trade idea in an option position that you'd be more willing to hold through to the end?

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 jackbravo 
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Out of curiosity, how much risk in $'s would you have needed to put on the table to realize the full $15k in missed opportunity costs?

Have you considered possibly expressing part of your trade idea in an option position that you'd be more willing to hold through to the end?

that's difficult to quantify. The risk is based on a stop loss target, which I have around 10 points, or 500$/contract. Yet the margin required to initiate the position is around 5000$/contract. 15K in opportunity costs would have required 15 contracts or about 75K in margin requirements/7.5K in potential risk...though margin and stop loss are not the same as having spent the money obviously.

I have thought about using options. I use options in equities, and am able to ride the fluctuations much more effectively, holding the positions for several weeks. Yet, I find it difficult to use options on a short term basis. Paying for extrinsic value is a difficult concept for me to get accustomed to, especially since it's quickly dwindling in the short term. I've tried doing day trades using Delta 40-50 strikes, with a small amount of sucess, but felt pressured as I had picked weekly expiration cycle to pay for the least amount of extrinsic possible. Do you use options? Would you suggest using further expiration dates?

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 MacroNinja 
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@jackbravo,

So I might suggest that the first step might be to get better at quantifying the risk involved in the trade. In the above example where you felt flustered by missing $15k in potential profits, the risk is precisely quantifiable as you have just done yourself calculating the $7,500 dollars at risk if the stop were to get hit in exchange for the potential to make $15k in profit.

I'm not sure how large of an account you are operating out of, but let's conservatively say you are very well funded with a $100k trading account, that represents 7.5% risk on a single trade with a 2:1 risk to reward ratio. I think the 7.5% risk by itself would you have thrown off of most trading floors.

I also wonder then, if psychologically your unwillingness to take the trade is because the amount you are putting at risk (both in a % relative sense, especially if you're account is say only $50k meaning you are risking 15% on the account and also an absolute $ sense is too large).

My coaching challenge to you then would be, what if you only took a maximum 2% risk exposure, and only took trades that had a greater than 3:1 risk to reward ratio? At a psychological level, would you find yourself A) more willing to pull the trigger on the trade and B) more willing to hold that trade to full profit?

Re: Options expiry

Along with this theme of quantification, let's define what a "short amount of time" means. I would shy away from day trading futures options just because the spreads are so wide that just the cost of the spread on the round trip would put a dent in the profits compared to just trading the futures contract out right.

With regards to how long to out for the expiry date, there's no easy answer because that involves a further analysis on theta, implied volatility for the relative value of the option itself, etc.

But as an over simplification, if I am expressing a swing trade and the volatility is not overpriced, then I want to give myself at least a 2-4 week time window for the option to play out.

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 jackbravo 
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MacroNinja View Post
@jackbravo,

So I might suggest that the first step might be to get better at quantifying the risk involved in the trade. In the above example where you felt flustered by missing $15k in potential profits, the risk is precisely quantifiable as you have just done yourself calculating the $7,500 dollars at risk if the stop were to get hit in exchange for the potential to make $15k in profit.

I'm not sure how large of an account you are operating out of, but let's conservatively say you are very well funded with a $100k trading account, that represents 7.5% risk on a single trade with a 2:1 risk to reward ratio. I think the 7.5% risk by itself would you have thrown off of most trading floors.

I also wonder then, if psychologically your unwillingness to take the trade is because the amount you are putting at risk (both in a % relative sense, especially if you're account is say only $50k meaning you are risking 15% on the account and also an absolute $ sense is too large).

My coaching challenge to you then would be, what if you only took a maximum 2% risk exposure, and only took trades that had a greater than 3:1 risk to reward ratio? At a psychological level, would you find yourself A) more willing to pull the trigger on the trade and B) more willing to hold that trade to full profit?

Re: Options expiry

Along with this theme of quantification, let's define what a "short amount of time" means. I would shy away from day trading futures options just because the spreads are so wide that just the cost of the spread on the round trip would put a dent in the profits compared to just trading the futures contract out right.

With regards to how long to out for the expiry date, there's no easy answer because that involves a further analysis on theta, implied volatility for the relative value of the option itself, etc.

But as an over simplification, if I am expressing a swing trade and the volatility is not overpriced, then I want to give myself at least a 2-4 week time window for the option to play out.

Thank you for your reply.

That's the thing, I no longer play the game with stops. I've realized after reading the SPOO thread on this site, and my experience after reading many trading books which all recommend the same thing (stops, R:R ratios, short term scalping techniques) that the literature available for beginning traders might actually be the cause of such a high failure rate. I can tell you that I've become much more successful as of late taking trades for specific reasons and getting myself manually out of a trade when those reasons are not true (of course, I'm not good at this yet, and many times my reasons turn out to be incorrect). In any case, I like this style of trading better as I don't feel like I'm forced out of trades by stops getting randomly hit. As such, figuring out when I'm on the wrong side of a trade is entirely dependent on the trade, and therefore the risk is only quantifiable on a per trade basis. For example, this past trade, I had 20 contracts short at 62.50, felt that if price broke out of the range towards the 67/68 area, then I was probably wrong and would get out, so that's about a 5 point stop. Yet I didn't stick with this plan due to my lack of experience and self -confidence, and got out at 61.

Really, the thing that's most difficult for me is when I find myself positioned against the predominant direction in the SPOO thread. I try not to read it for people's trading ideas, and rather read it for the philosophy of trading, but it's very difficult to stay away. In this current trade, I felt most people in that thread were long and I was short, and I got scared out of the trade. There have been many trades in the past when I was positioned opposite and lost, and those trades still plague me. The previous big trade, I was aligned with the people in the thread, and was able to hold the trade and let it play out. So I think it's really a lack of confidence in my own interpretation of market data.

Definitely position sizing has a huge impact, and I'm probably trading too big. Had I 2 contracts in the trade, I would've most likely let it play out. I'm trading out of a ~200K IRA account, and my focus on growth of the account rather than using it for livelihood. I try to trade about 1contract for 10K in the account as I feel my general mental stop of 10 points represents 5%, and is in line with what my realizations of how stops should be used (to represent an incorrect interpretation rather than to as a risk tool).

Regarding options, I haven't tried trading futures options but have used SPY options as a surrogate given high liquidity. But it's still not the same as trading futures, and I find trying to swing trade the stock market to be more difficult than swing trading individual stocks (which I've done).

I think what I'm going to do from now on is only post successful trades. My thought is that if I only write down success, I will become more confident in my own interpretation and style of trading. I realize this goes against the grain and possibly the intent of journaling, yet I've always been attracted to the road less traveled until it leads to a dead end.

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 MacroNinja 
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Well, it sounds like you intuitively understand that you're probably trading at too large of a size, which suggests that the obstacle is the emotional discipline to not get scared when you're probably right. (Especially if you're already going through the mental process of drawing a line int he sand to establish when you are clearly wrong int the trade and need to get out).

Based upon the numbers we've talked about, if the account size is 200k, then that still means your mental stop is at 3.75%, which still seems to me entirely too large for an account focused on equity growth (rather than day trading income). Most funds I'm familiar with have a MAXIMUM monthly draw down of 5% before the trader isn't allowed to execute any more trades for the rest of the month.

Then on a daily basis, a maximum position size is maybe around .5% of exposure if the stops get hit. And on the up side, anything north of 30% for the year is simply stellar.

As you've suggested, if you only would have traded 2 contracts, you would have had no problem staying with the trade you designed. Now the question for your own emotional gut check, would you have made more money on 2 contracts going to your trade target, or did you make more money trading the 20 contracts? You might even just keep a log of this over time of your actual executions versus your designed trade executions completed but at the reduced size, and see which ones performs better. If the current size outperforms in reality - emotions and all, then just keep on trucking. If the hypothetical small size does better...then maybe switch over.

Best of luck!

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 jackbravo 
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Holy smokes! A 0.5% maximum drawdown a day would put me at trading 2 ES contracts (which, really, would be trading the full contract and negating the leverage). But that is a major weakness I have, portfolio risk control, and something I'm working on.

Thank you for the well wishes!

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 jackbravo 
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Not sure about fundamentals, but I'm SAST (short-a-shit-ton) ES/NQ for the following reasons:

1. It seems that price action has been signaling distribution for the past few weeks.
2. Vix appears to be suppressed, given the spikes of late, which are the definition of volatility.
3. Seasonality indicates a downtrend until tax day.
4. I don't see a reason why long term buyers would step in at this juncture, when they need to use monies to pay taxes, it's not the beginning of a month or quarter, we're near all time-highs, lots of volatility as of late. Without long term buyers, the thing should range at worst, drop at best.

I do not like that bonds and gold are not confirming my bias.
I do not like fading the SPOO thread.

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Skinchin
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No offense but it sounds like you are playing with fire.

I would take a step back and quantify your risk and define your strategy a little better before even considering the size you are suggesting.

Stops are vital for long term survival, especially for beginners. The 'literature' recommends them for a reason and is not the reason why many fail. This would be more likely due to the fact that beginners do not have a well defined plan or the discipline to go with executing their plan.

My 2c anyway.

Best of luck and I mean no disrespect, just don't want you to blow your account before you have had a real go at this game.

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 jackbravo 
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Skinchin View Post
No offense but it sounds like you are playing with fire.

I would take a step back and quantify your risk and define your strategy a little better before even considering the size you are suggesting.

Stops are vital for long term survival, especially for beginners. The 'literature' recommends them for a reason and is not the reason why many fail. This would be more likely due to the fact that beginners do not have a well defined plan or the discipline to go with executing their plan.

My 2c anyway.

Best of luck and I mean no disrespect, just don't want you to blow your account before you have had a real go at this game.

No disrespect felt. Thank you for your comments.
You're right, I definitely do need much better risk control.
However, I strongly believe the use of stops is not it. If you follow the SPOO thread and read the works of Victor Neiderhoffer, these multi-decade traders advise that the use of stops is for the benefit of brokers rather than traders. In my own experience, I have found that to be true as well. In fact, I have been much more successful since since stopping stops. Once in a while, I'll use them when I'm in scalping mode, and inevitably, I take losses due to getting stopped out.

For me personally, I will attempt to risk control by controlling position and cost basis. I'm still trying to figure how best to determine when my idea regarding a certain scenario is wrong (like today). A certain amount of price movement against me? A certain loss amount? Price action?

Anyway, appreciate you stopping by, and wish you success with your trading as well.

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 mathius777 
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When I lowered the amount I was risking on a given trade to the point where I felt NO emotion at all if I lost the trade, my success went up drastically. I didn't feel like I had to "time the top or bottom" or be 100% right. Think about the psychology here.

If you are betting 20% of a portfolio on a single move, how sure do you need to be to pull the trigger? Probably more sure than is actually possible. But if you are trading 1%? You would probably not have any problem pulling the trigger.

And the other thing is, WHY risk so much money if one isn't consistently profitable anyways? If you can't be profitable every month with a single contract, why would you think that would change for 2 contract? Or 10?

"Holy smokes! A 0.5% maximum drawdown a day would put me at trading 2 ES contracts (which, really, would be trading the full contract and negating the leverage). "

If you could successfully trade 2 contracts and capture 10 points a week(520 a year) with 2c that'd be 52k in a year. 26% of a 200k portfolio is nothing to look down on to be sure. And the important thing is you are ALIVE to be in the game for the big moves.

You could even set up your plays so that you only go in SLIGHTLY larger on a move you would consider a "once in a month" opportunity.

My 2c.

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 jackbravo 
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mathius777 View Post
When I lowered the amount I was risking on a given trade to the point where I felt NO emotion at all if I lost the trade, my success went up drastically. I didn't feel like I had to "time the top or bottom" or be 100% right. Think about the psychology here.

If you are betting 20% of a portfolio on a single move, how sure do you need to be to pull the trigger? Probably more sure than is actually possible. But if you are trading 1%? You would probably not have any problem pulling the trigger.

And the other thing is, WHY risk so much money if one isn't consistently profitable anyways? If you can't be profitable every month with a single contract, why would you think that would change for 2 contract? Or 10?

"Holy smokes! A 0.5% maximum drawdown a day would put me at trading 2 ES contracts (which, really, would be trading the full contract and negating the leverage). "

If you could successfully trade 2 contracts and capture 10 points a week(520 a year) with 2c that'd be 52k in a year. 26% of a 200k portfolio is nothing to look down on to be sure. And the important thing is you are ALIVE to be in the game for the big moves.

You could even set up your plays so that you only go in SLIGHTLY larger on a move you would consider a "once in a month" opportunity.

My 2c.

Yes, you are right. I was falling into the classic rookie mistakes of wanting too much too fast. I'm sure I'll make more! My timeframe has recently changed away from a day to couple-three days to a week. It's much less stressful and easier to follow a trend, but less profitable since many times weeks end close to where they start and the big intraday moves are not captured. I'm okay with that though, for now, until I'm able to become consistent. At this point, I feel like I've hit this breakeven zone where I'm losing everything I'm making. At least I feel like I have a better grasp on the overall picture of the markets, what moves them, and such.

Thanks for your input, Mathius777, and wish you success in your trading.

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 jackbravo 
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After blowing up my third account, here I am again to do it better. About a year and a half since I've started now.

Some realizations I've come to:
I do great in downturns, terrible in upturns, terrible in ranges.
My read of the charts is not bad, but is tainted by low confidence.
My read of the general market conditions is still subpar.
Need to exercise patience when uncertain, as I still like to be in the market all the time.

Some rules I will be trying to implement:
1. Focus on trying to make good decisions, rather than trying to make money.
2. Save the bullets for when the target is clear.
3. If the market is ranging, take points off the table.

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mrgufx
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jackbravo View Post
After blowing up my third account, here I am again to do it better. About a year and a half since I've started now.

Some realizations I've come to:
I do great in downturns, terrible in upturns, terrible in ranges.
My read of the charts is not bad, but is tainted by low confidence.
My read of the general market conditions is still subpar.
Need to exercise patience when uncertain, as I still like to be in the market all the time.

Some rules I will be trying to implement:
1. Focus on trying to make good decisions, rather than trying to make money.
2. Save the bullets for when the target is clear.
3. If the market is ranging, take points off the table.


hi jackbravo. keeping it simple really works. i used to find myself staring at the charts for hours, until i realised that i needed help. mentors and instructors cost money, but the information on this site is for free, use it wisely. good luck buddy, and never say die!

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 jackbravo 
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mrgufx View Post
hi jackbravo. keeping it simple really works. i used to find myself staring at the charts for hours, until i realised that i needed help. mentors and instructors cost money, but the information on this site is for free, use it wisely. good luck buddy, and never say die!

thanks mrgufx! appreciate the encouragement.

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mrgufx
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thanks mrgufx! appreciate the encouragement.


no problemos! i notice you've started a new thread, a blank canvas, so i won't spoil it. i mention keeping it simple, by this i mean not only keeping your chart visual simple, but your set-up also. the decision to enter the market (or not) must be black or white, there must be no dilemma or indecision, as an overly complex thought process will blow your mind and shred your nerves. have fun!

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 Blash 
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jackbravo View Post
After blowing up my third account, here I am again to do it better. About a year and a half since I've started now.

Some realizations I've come to:
I do great in downturns, terrible in upturns, terrible in ranges.
My read of the charts is not bad, but is tainted by low confidence.
My read of the general market conditions is still subpar.
Need to exercise patience when uncertain, as I still like to be in the market all the time.

Some rules I will be trying to implement:
1. Focus on trying to make good decisions, rather than trying to make money.
2. Save the bullets for when the target is clear.
3. If the market is ranging, take points off the table.

I love the part you wrote above in bold. It's so key to life in general and trading specifically. I stumbled upon a TedTalk by accident about 6 months ago and can honestly say it has had a huge influence on me and changed me greatly for the better by implementing a few relatively simple things for me. May be different for others I understand. It's about having the tool to be able to make better decisions. I wish you only the very best my friend. Here is the link to that TedTalk if you are interested.

Ron

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 jackbravo 
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Hey Blash - thanks for the link. Very interesting TED talk. Appreciate your comments.

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