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Nathanology - Pullback Strategy Improvement


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Nathanology - Pullback Strategy Improvement

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  #1 (permalink)
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I thought I'd start this journal to record my thoughts, trades and try to improve my intuition and commitment. Recently I began trading live 1 day a week for about 30 minutes and sim trading 4 days a week for the same time frame. I work as an accountant and trade during my morning break at about 10am. The strategy I've grown comfortable is what I would call trading pullbacks within an obvious trend. I use it to make an extra hundred dollars a day, though really it's a week because I only trade live 1 day. I use a OHLC 610 tick chart and a daily chart. The only indicators I have on it are a 3/10 MACD and 20 period 2.25 Keltner channels. Some times I manually draw trend-lines and or use previous days pivots. I have about a 5 years equity investing experience and a year of watching and sim trading the ES.

So here goes... Today I made a live trades and broke way out of my comfort zone. After scalping some early moves, I determined I would take a long position with 1 contract and it went against me. Not badly for most experienced traders but for me it freaked me out a bit. After calming down and watching I saw an opportunity to average down on a pull back and suspected reversal. I got in long again adding 3 contracts! My average was 2064 and my profit target was just 4 ticks. Not smart, but it worked out. My limit order at 2065 was hit and I exited the position with an elevated heart rate and my single greatest 1 trade profit.

The market continued to go up and it was pointed out to me that (a) it was foolish to quadruple my position from what I was used to, and (b) the size probably caused me to exit a winning position WAY to early. This all being true, I'm going to hang it up for today and commit to this journal on my live days. I hope others more experienced than I will offer advice, encouragement or criticism at their convenience.

So here is my dilemma, if you will, I have a futures account balance of roughly $30k; which means I have the capital to trade much larger positions than I am comfortable trading. I see a need to increase my confidence level to capture broader moves in the market rather than scalping smaller pullbacks. My current strategy is developed out of being head shy from suffering some big losses early on in my foray into futures.

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  #3 (permalink)
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Today in preparation of my Tuesday live trade day next week I've been meditating to get my head right. I don't mean the cross-legged mantra meditation I mean the dissociative relaxation type. As I relaxed my mind it meandered through various random thoughts and memories and I suddenly realized a problem I faced when trading.

Existential Angst.

It has been described as the feeling of standing on a precipice and facing the fear of falling off and dreading the possibility of throwing oneself off. This is immobilizing. This is why so many traders end up looking for the Holy Grail of indicators, patterns or other system and/or look for a mentor, room or club to direct their actions. Also, this is the cause of perpetual SIM trading. The reason this is wrong is that it is an unhealthy way of restricting one's own freedom and absolving oneself of responsibility. But, one can never remove the angst; Angst is before nothing.

From what I can tell, Existential Angst as experienced in the Trade is good. It is the root from which we experience the reward of correct steps and the punishment of incorrect steps. whether reward or punishment results, the only way to truly experience freedom is to overcome the insecurity about the consequences of one's own action. Freedom and Responsibility remain a condition of every action. To attempt to remove either from the experience is to remove the possibility of growth. Not all choices end with dread, therefore Angst should not immobilize us nor should we attempt to circumvent feeling it.

How to become surefooted on the edge of that precipice(the right-hand side of the chart perhaps), that is the question. Accept others view objectively as neither truth or falsehood, not blindly as one or the other. Take action only based on your own experience and understanding. Recognize the choice(long, short, flat) has both dreadful and delightful consequences that should be weighed authentically in accordance with one's own freedom.

The beauty of this approach is that, when you act in reality and with authenticity, the price will always give feedback that can mitigate how you the Angst effects your choices in the future. If you act in unreality, such as within SIM or paper trading, and/or without authenticity, such as shadow trading a room/mentor or perfunctorily following chart signals or indicators, you will always be immobilized by Angst and Dread.

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nathanologist View Post
Today in preparation of my Tuesday live trade day next week I've been meditating to get my head right. I don't mean the cross-legged mantra meditation I mean the dissociative relaxation type. As I relaxed my mind it meandered through various random thoughts and memories and I suddenly realized a problem I faced when trading.

Existential Angst.

It has been described as the feeling of standing on a precipice and facing the fear of falling off and dreading the possibility of throwing oneself off. This is immobilizing. This is why so many traders end up looking for the Holy Grail of indicators, patterns or other system and/or look for a mentor, room or club to direct their actions. Also, this is the cause of perpetual SIM trading. The reason this is wrong is that it is an unhealthy way of restricting one's own freedom and absolving oneself of responsibility. But, one can never remove the angst; Angst is before nothing.

From what I can tell, Existential Angst as experienced in the Trade is good. It is the root from which we experience the reward of correct steps and the punishment of incorrect steps. whether reward or punishment results, the only way to truly experience freedom is to overcome the insecurity about the consequences of one's own action. Freedom and Responsibility remain a condition of every action. To attempt to remove either from the experience is to remove the possibility of growth. Not all choices end with dread, therefore Angst should not immobilize us nor should we attempt to circumvent feeling it.

How to become surefooted on the edge of that precipice(the right-hand side of the chart perhaps), that is the question. Accept others view objectively as neither truth or falsehood, not blindly as one or the other. Take action only based on your own experience and understanding. Recognize the choice(long, short, flat) has both dreadful and delightful consequences that should be weighed authentically in accordance with one's own freedom.

The beauty of this approach is that, when you act in reality and with authenticity, the price will always give feedback that can mitigate how you the Angst effects your choices in the future. If you act in unreality, such as within SIM or paper trading, and/or without authenticity, such as shadow trading a room/mentor or perfunctorily following chart signals or indicators, you will always be immobilized by Angst and Dread.

Some good points and very eloquently expressed. I would add that even taking the "right choices"..in accordance with one's methodology..can still result in a series of losses. However, the Angst and Dread is intensified when one takes poor trade entries that are random and impulsive..due to a lack of discipline or emotional control. As one progresses as a trader and understands the laws of probability, these negative feelings of dread and angst are usually diminished. I remember being unable, for several years, to be able to enter a live trade and not feel my pulse accelerate greatly and be filled with anxiety. Thankfully, I no longer experience that.

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nathanologist View Post
Today in preparation of my Tuesday live trade day next week I've been meditating to get my head right. I don't mean the cross-legged mantra meditation I mean the dissociative relaxation type. As I relaxed my mind it meandered through various random thoughts and memories and I suddenly realized a problem I faced when trading.

Existential Angst.

It has been described as the feeling of standing on a precipice and facing the fear of falling off and dreading the possibility of throwing oneself off. This is immobilizing. This is why so many traders end up looking for the Holy Grail of indicators, patterns or other system and/or look for a mentor, room or club to direct their actions. Also, this is the cause of perpetual SIM trading. The reason this is wrong is that it is an unhealthy way of restricting one's own freedom and absolving oneself of responsibility. But, one can never remove the angst; Angst is before nothing.

From what I can tell, Existential Angst as experienced in the Trade is good. It is the root from which we experience the reward of correct steps and the punishment of incorrect steps. whether reward or punishment results, the only way to truly experience freedom is to overcome the insecurity about the consequences of one's own action. Freedom and Responsibility remain a condition of every action. To attempt to remove either from the experience is to remove the possibility of growth. Not all choices end with dread, therefore Angst should not immobilize us nor should we attempt to circumvent feeling it.

How to become surefooted on the edge of that precipice(the right-hand side of the chart perhaps), that is the question. Accept others view objectively as neither truth or falsehood, not blindly as one or the other. Take action only based on your own experience and understanding. Recognize the choice(long, short, flat) has both dreadful and delightful consequences that should be weighed authentically in accordance with one's own freedom.

The beauty of this approach is that, when you act in reality and with authenticity, the price will always give feedback that can mitigate how you the Angst effects your choices in the future. If you act in unreality, such as within SIM or paper trading, and/or without authenticity, such as shadow trading a room/mentor or perfunctorily following chart signals or indicators, you will always be immobilized by Angst and Dread.

Mediocrity results when we operate inside our comfort zone. This is part of our survival mechanism, to draw boundaries and operate in an environment that is perceived as safe. Greatness happens when we are willing to step out of the comfort zone and face the fears. On Dr Hawkins scale of consciousness, Angst is the stage where one is willing to challenge the status quo. It is above Apathy and Fear where one is retired in the comfort zone with no conscious effort to effect meaningful changes. Once you develop the courage to face the fears and learn to manage the discomforts, awareness enhances and life will result from the conscious choices we make. When we operate at lower frequencies, our actions are mostly automatic, we resort to pre-programmed emotional responses. This is true with trading and every other decisions we make in life.


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Goal for today was to cope with angst to stay even headed. Forgive my not having time (at work) to enter all my reasoning for entries.

1. Long 2093.25 stopped +0.25 after it went my way a bit and came back.
2. Short 2092 closed -2.5
3. Long 2094.5 stopped -2.25 ticks
4. Long 2092.75 stopped -0.5 ticks
After taking a break and pulling in the emotion, my plan was to ride a short to new low and had stop just above VWAP which was hit on a rebound.
5. Short 2092.5 stopped out +0.75

I asked for Criticism from folks on the spoonalysis thread and was smacked with the truth that I was trading like a scalper. stops too tight. Why didn't I see that in the heat of it?! Soo... I guess I need to reevaluate my stop strategy and figure out what's reasonable for the size moves I want to catch.

After briefly reexamining my strategy I think what I'm trying to do is capture at least 50% of the average daily range off from a pullback. With that being my goal I think my initial stops need to be just past the average daily noise. So for today I should have been going for about an 11 point move (22/2) and my stops should have been like... 3.5(average noise) to 5.5(today's noise) points away from entry. I will practice this in SIM the rest of the week and try it for real next week.

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Took one last one today trying to apply this new idea of loosening the stops to account for noise.

7. short at 90.50 closed +5.75 near ONL stop was up 5 pts @ 95.5

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I took an extra Live day today because I had some time with the wife and she wanted to see what this was all about... It was good to see things from her eyes and bad because she has yet to experience the angst of live trading. Add to that my inexperience of trading news days (NFP) We had a bumpy start but fell into a groove. Since this was a short session and we were distracting each other talking PA and such, I think it went well. I almost don't want to include it in my journal but I will for authenticity.

Initial bias was short after reviewing the overnight session and watching the breakdown from 8:30-9:30. So we were looking for pullback entries, and she also like reversals(though I don't...) so we tried some of each. She also insisted no more than a 8 tick mental stop. She is uncomfortable with my new strategy of larger profit Targets and proportionally larger stops, since I wasn't playing for the whole day I figured that was a fair compromise.

1. Short 2071 got out at 2073.25 -2.25
2. Short 2073.75 got out at 2075.5 -1.75
3. Short 2075 got out at 2075 B/E line -0.00

At this point it was time to take a breath and is the point we hammered out some rules of play. Trying to make a solid play with somebody looking over your shoulder questioning every move lends itself to doubt and uncertainty.

4. Short 2073.25 out 2073.5 +0.25
5. Short 2073.50 out 2070 +3.50
6. Short 2065 out 2064 +1.00

Was this a good exercise for my development as a trader? No, I did not get to practice my primary trading strategy which calls for identifying the primary trend for the day, enter on a pullback with a profit target of 7-8 points. However, it was interesting to hear my wife go through some of the struggle I did earlier on. The compromise and difficulty of agreeing to enter or exit on the fly was fun/chaotic. We seemed to get it after a while and ended the day net green by... what like $60? It was a good reminder of how I used to be entering and exiting under fear of failure. I don't want to go there again, and I'm reminded of how far I've come, growth wise. It also cemented in my mind that I never, NEVER, want to go back to scalping. I'm worried this experience set me back mentally, but maybe not; I mean I started to feel the fear she felt and spent the whole time in the market just dying to get out. I don't like that. That is not productive or authentic. Sometimes experiencing "the other" can aid you in becoming more authentic. I will try to make that the case this time.

Was it good for our relationship and my continued effort to learn to trade for a living ultimately? I think so. She understands more why I hesitate to focus solely on trading, the angst that is there and the real risks involved. Our relationship was strengthened by bonding during crisis... I guess. I wouldn't count any of those trades as crisis mode trades, but she thought it was the end of the world. Her initial view was that I got to take a 15 minute coffee break from work and make $1000 dollars everyday. but now I think she sees how hard it can be and will be more supportive.

The take away is, I don't think I want to do this again. Interesting but useless exercise. Will I do it again? Yes, definitely- why? Because she liked it. Maybe we will trade SIM together as a game, like role playing...

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nathanologist View Post
I took an extra Live day today because I had some time with the wife and she wanted to see what this was all about... It was good to see things from her eyes and bad because she has yet to experience the angst of live trading. Add to that my inexperience of trading news days (NFP) We had a bumpy start but fell into a groove. Since this was a short session and we were distracting each other talking PA and such, I think it went well. I almost don't want to include it in my journal but I will for authenticity.

Initial bias was short after reviewing the overnight session and watching the breakdown from 8:30-9:30. So we were looking for pullback entries, and she also like reversals(though I don't...) so we tried some of each. She also insisted no more than a 8 tick mental stop. She is uncomfortable with my new strategy of larger profit Targets and proportionally larger stops, since I wasn't playing for the whole day I figured that was a fair compromise.

1. Short 2071 got out at 2073.25 -2.25
2. Short 2073.75 got out at 2075.5 -1.75
3. Short 2075 got out at 2075 B/E line -0.00

At this point it was time to take a breath and is the point we hammered out some rules of play. Trying to make a solid play with somebody looking over your shoulder questioning every move lends itself to doubt and uncertainty.

4. Short 2073.25 out 2073.5 +0.25
5. Short 2073.50 out 2070 +3.50
6. Short 2065 out 2064 +1.00

Was this a good exercise for my development as a trader? No, I did not get to practice my primary trading strategy which calls for identifying the primary trend for the day, enter on a pullback with a profit target of 7-8 points. However, it was interesting to hear my wife go through some of the struggle I did earlier on. The compromise and difficulty of agreeing to enter or exit on the fly was fun/chaotic. We seemed to get it after a while and ended the day net green by... what like $60? It was a good reminder of how I used to be entering and exiting under fear of failure. I don't want to go there again, and I'm reminded of how far I've come, growth wise. It also cemented in my mind that I never, NEVER, want to go back to scalping. I'm worried this experience set me back mentally, but maybe not; I mean I started to feel the fear she felt and spent the whole time in the market just dying to get out. I don't like that. That is not productive or authentic. Sometimes experiencing "the other" can aid you in becoming more authentic. I will try to make that the case this time.

Was it good for our relationship and my continued effort to learn to trade for a living ultimately? I think so. She understands more why I hesitate to focus solely on trading, the angst that is there and the real risks involved. Our relationship was strengthened by bonding during crisis... I guess. I wouldn't count any of those trades as crisis mode trades, but she thought it was the end of the world. Her initial view was that I got to take a 15 minute coffee break from work and make $1000 dollars everyday. but now I think she sees how hard it can be and will be more supportive.

The take away is, I don't think I want to do this again. Interesting but useless exercise. Will I do it again? Yes, definitely- why? Because she liked it. Maybe we will trade SIM together as a game, like role playing...

It is fantastic to have a supportive wife !!!. If you have read "Pit Bull", Marty attributes a lot of his success to his wife. She did not read the market but she was reading him and helping him when he was in trouble. I sometimes try to explain trades to my wife but yet to see any glimpse of interest .

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Today I was feeling "it" -I was in tune. I am not sure why but I was clear headed and internally peaceful. Each trade I was sure of, and not at all anxious about a loss. I cannot explain why. I was however quick to exit trades I thought were not going my way.

1. Short 2081 closed 2080 because it seemed wrong.
2. Short 2082 closed 2081.75 this actually could have been a decent scalp but I saw the market reverse and got out to enter long.
3. Long 2080 closed 2083.75 I know these ranges aren't that great, but coming from a trader who was always happy to grab a 2 tick scalp, I felt like I did okay.

I need to get more comfortable getting into a position and holding on through the turbulence. I want to be able to call the direction and watch it go my way. hold 1 or 2 trades a day instead of trying to max profit before each smaller correction.

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Felt good about today. Read the news on japan, oil and the NY regional. Thought it was going to be a downtrend day. after 1st trade I realized something was wrong and kept trying to trade counter-trend (mentally only) with no success. Finally gave myself a stern pep talk and took a position on pullback before lunch. Held that through some chop for a nice little recovery trade. If I had been faster to turn my bias around I could have caught a nice up-trend move for the whole day.

1. Short 2093.50 out 2093 I believe this was a pullback that I expected to be a reversal, stopped out.
2. Long 2091 out 2095.75 just kept moving my stop up as it pushed past ONH and let it go on a 2x rejection from new high.

Not a bad day. I struggle with the idea that I could be taking more pts scalping frequently... but I'm trying to learn a better, less anxious way to trade... so this is small progress.

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First day trading in a while. Went short 1 contract 3:20pm at 1962. The high volume spike at 2:36pm for 1961 signaled to me that people were taking profits. the next 30 min it lingered at 1962-64 for a while but began drifting downward. stop 2 ticks above daily high and no PT, just letting the market take me out.

Scratched out at a small loss. no reversal into the close.

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I'm going to open a journal in the Elite threads sections.

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Mike can help you move this journal if you request and wish to do so for continuity.

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