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I fell behind on my journal a bit. Going through my chart from yesterday took some time. It was a crazy volatile session and I took a total of 20 trades! I can't remember why now, but on one of my losers I took a 12-tick stop. So that hurt. And on several of my winners I only took a tick or two profit. So, while I had 15 wins and only 5 losses, I still managed to lose about $95. It's the first losing day for me in a while. It wasn't heinous but it was still a tough day. If I was a little more skilled at reading the price action it could have been a spectacular day because there was so much price movement. Holy crap prices were really moving! Today, of course, was an even bigger selloff than yesterday but that is subject for another journal entry (spoiler: I had a good day).
Yesterday (Friday) I completed my first full week of real trading since early June. I am pleased to say that I ended the week with a profitable day. Here is a summary of this most recent foray into real live trading:
Total profits $354.10, trading 1 contract only. I have withdrawn $300 from my trading account. This is part of my plan - withdraw all profits weekly (rounded down to the nearest $100) until I've taken $3000 back.
I'm sure everyone reading this is well aware of the recent volatility. Yesterday, I adjusted my parameters to accommodate. Instead of a 4-tick target and 8-tick stop, I used a 5-tick target and 10-tick stop.
In my 4th chart the comment, "Failed 2nd entry long but it taking off so...." is supposed to say, "Failed 2nd entry long but it wasn't taking off so...". The thing with a failed 2nd entry is it's supposed to trap traders on the wrong side of the market. And so if it really is a valid trap then prices should take off quickly in the other direction. This trade wasn't doing that so I exited with a 1 tick profit.
I want to discuss my 4th trade today. I took a long position but really it was not a good place to go long at all. Prices were stuck in a tight trading range, and I was going long after a failed break below the range, but there was a steep down-channel which brought prices down into that range to begin with. Usually, if prices trade down into a range they will eventually break out of that range to the down side. Not every time, but most of the time. So, with prices trapped in that tight range, I really should have been looking for a good place to get short at the top of the range, as opposed to getting long at the bottom of the range. Despite my "mistake", despite being "wrong", the trade still worked out. It was a win because I only took 5 ticks. I believe this exemplifies one of the nice things about my (Mack's) system. I don't have to be really good at reading the price action. I can be only so-so and still make money.
There are a lot of charts for today. The first shows the entire day. The 2nd - 4th show my actual real-money trades. The rest just show my analysis of the price action and identify where I think the good entry setups occurred. I also did some sim trading later in the day which you can see on my charts as well.
Well, I fell behind on my journal again. I'll try to catch up tonight. It just depends on how busy work is.
Just to bring you up to speed, I started this most recent foray into real money trading on Friday, August 14, after more than 2 months on the simulator. I put $800 into my account (plus I already had about $200 in there) and by Friday, August 21 I had a little over $1300 in the account. As per my plan, I initiated a withdrawal of $300 from the account which came out Monday morning. So, I started Monday with a little more than $1000 in my account.
Monday, of course, was completely insane! The volatility turned out to be too much for me. I actually started the day with a 5-tick win. Prices were moving really fast and the bars were huge. I was switching back and forth between my 6500 volume chart and a faster 3820 volume chart. The faster chart is nice because the bars are smaller and I can use tighter stops. But it's also super fast. I ended up switching back and forth several times and in general wasn't doing too well.
After the initial win I took a giant 6.25 point loss. I was short and I had foolishly put my stop above some recent highs a full 6 points away. That loss really set me back and I spent the rest of the day trying to make up for it. I almost made it, too. But then, right near the end of the session I was expecting a big reversal to the upside. I got long a little too early but my stop survived. It started going up and I could have taken my 6-tick scalp, but I was expecting more upside. This was a huge mistake, of course. After it went up 8 ticks I started trailing my stop up. Wouldn't you know it, prices came back down to my stop exactly and I went from an 8-tick winner to an 11-tick loser. I was really upset with myself because I've told myself many times to just take my scalp if I can get it. It's far too early in my trading career (and my capital is insufficient) to try to manage my trades like runners. I just need to get out with my scalp and wait for the next setup.
Anyway, I was frustrated with myself for letting that winner turn into a loss. So, what did I do? You may be able to guess. I took a revenge trade. I got long again, quite a bit higher than where I had been stopped out previously. And then I made the exact same mistake again!!! I could have taken a 6-tick scalp but now, stupidly, I was really convinced that prices would go on to make higher highs. I was determined to catch a big win and erase my losses on the day. Well, of course it didn't work. It dropped down hard and I kept holding on. Then I committed the worst sin of all. I doubled down on a loser. My equity was already dangerously low and the combination of a 2 contract long position as prices continued to drop, that was the final straw. My broker forced the issue and closed the position. I blew out the account.
At that point I wasn't sure what to do. I had planned to see what I could do with the $800 and told myself that if I lost it all I would go back to sim trading only. But I hadn't lost it all. I lost $500 of it and $300 of it went back to my bank account. This was a contingency for which I had not planned.
For better or worse, I decided to put the $300 that I just withdrew back into my trading account, which actually would be enough to trade 1 contract. But I also wanted to put some extra money in there for padding. If I try to trade with just $300 and my first trade is a loser, I'm done. So I put an extra $400. This brings my total investment up to $1200. I will continue to withdraw all subsequent profits (rounded down to the nearest $100) at the end of each week.
All of that said, here are the charts for Monday. I spent several hours going through the charts and made numerous comments. This is the best way I know of to learn and perhaps not make the same price action misreads in the future. Also, I obviously need to stick very strictly to a policy of taking my 6-tick scalp when I can get it.
8/24/2015 -$1030.60, 19 wins, 11 losses (the first chart says -$1005.60 which is incorrect because it didn't include the $25 fee for the forced liquidation)
Yesterday I traded mostly on the simulator. My deposit was made available to me at about 10:00 am PST. I was pretty nervous but also very focused. I was hyper-aware that I could not lose any money or I would be back to the simulator for another couple months, probably.
The price action was very volatile as usual. I waited for a nice 2nd entry short setup and took it. Due to the volatility I was using a 6-tick target and 12-tick stop. My target was hit very quickly and I decided to quit and switch back to the simulator for the rest of the day.
Wednesday was similar to Tuesday. I was still using a 6-tick target and 12-tick stop, and still fairly nervous about my account balance and not wanting to screw it up. I really want to succeed this time around and not have to make another deposit ever again. Therefore, as soon as I had two winning scalps in the bag, I called it a day.
The volatility has come down a bit so yesterday I was using a 5-tick target and 10-tick stop.
I didn't comment on the chart regarding my first trade. It was not a good read of the PA on my part, that's for sure. There had been a 2nd entry short and I wanted a little better entry price so I used a limit order. After getting filled prices never really went down more than a tick or two. After a couple minutes I got stopped out with a full 10-tick loss.
It's always difficult when I start the day with a loss. It's hard to stay patient and dig myself out of that hole. Fortunately, I was able to make it happen yesterday.
Once again I started today with a loss. The rest of the day was a real battle. I made some good trades and some bad trades. At my worst point in the day I was down $362 but I managed to get most of that back by the end of the day.
Comments are on the charts.
8/28/2015 -$91.88, 13 wins, 6 losses
I hope everyone had a good week and enjoys their weekend.
I traded a day on replay. Did pretty well although there were a couple mistakes I made when I didn't believe prices would keep heading up. But still, I made a good profit on the day.
If you don't control trade volume for a given day and have pre-set limits in terms of how much you can lose before you stop for the day, then you are setting yourself up for one day where you get behind, maybe $400 using your numbers historically, and then keep trading and possibly double down on a losing trade and now your are down $1000 for the day. You should have a max number of trades for the day and a max allowable loss and profit for the day and when either are hit, calling it a day and stepping aside. That's one of the beauties of automation, it removes the revenge trade and knowing when a day just isn't a good day to trade and shutting down for you.
The other concern is now you are afraid as you mention (and should be, we all should have some fear in the market to be disciplined). Many times fears holds people back from trading in good markets. At the end of the day, you need to trade all set ups that meet your rules. For example you may have 50 trades in one month, after you add everything up, there were probably 10 trades that produced profit for that month. But you have to take all of the 50 trades including the 40 that netted break even because you have no idea of outcomes. It has to be an emotionless game of probability. Again, another beauty of automation.
