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Papa's Trading Journal

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  #321 (permalink)
 bluemele 
Honolulu, Hawaii
 
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papa15 View Post
First, I want to say today was a positive day dollar wise. That is the good news. I did 7 trades and was 6 for 7....which is also good news. The bad news is the losing trade, which was the second one for the day, suffered a large stop loss. I had the stop entered as a fixed number of ticks (12) but manually adjusted it to be above a moving average. I did not really look at the risk to reward before hand, and if I had I should have realized it was not good enough to take the trade. My bad on that. My second bad is that once the short term ergodic turned above its signal line, I should have cut the trade. That is a strong indication that the trade is not working.....

Any way, I went into a hole and spent the rest of the day working out of it. I really focused on following the entry criteria as closely as I could. The market was fairly choppy and about time stuff would line up, price would reverse. It took a lot of patience, but I did get positive on the day. I used smaller targets, trying to increase the probability of success.

A real difficulty I face is I am a one lot trader and I face the issue of do you trade for a fixed target or do you use a trailing stop loss in an effort to get a larger target. I have always defaulted to using the fixed target method. Each of the trades I took today, I could have gone for a slightly larger target, but I chose to use the smaller targets as I am still "kicking the tires" of this ergodic setup. I want to see it under many different price action scenarios to get a better grasp of how it responds. I would welcome any feedback you folks have on this subject.....it is one I have pondered for a long time.....

Papa15

Hi Papa,

1. Stops and R:R could kill you on a bad day (ranging). Curious if you have a daily loss limit just in case or a max # of bad trades?

2. With the trailing stops, I think you could move your stop to an area if it breaks below you are good. One method might be to have your stop do price - 1 tick or something if it hits your target. I think you are going +6 TP right? So, if it goes +6 then move your stop to +5, that way if it moves quickly then you still get most of the move and more. Then you just watch price action and decide. Having such a small TP on CL can be a real challenge because it will move 6 ticks like nothing in a 18 tick move! Then just exit on the slowdown or DB/DT, FIB or whatever you may use?

Just my opinion only.

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  #322 (permalink)
 bluemele 
Honolulu, Hawaii
 
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Oh, in my opinion one more thing is that a fixed maximum stop is great! That stop was HUGE as you commented and I believe a smaller maximum fixed stop is needed.

I think your stop today was like 5-6 times your reward right?

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  #323 (permalink)
 papa15 
Wake Forest, NC
 
Experience: Intermediate
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bluemele View Post
Oh, in my opinion one more thing is that a fixed maximum stop is great! That stop was HUGE as you commented and I believe a smaller maximum fixed stop is needed.

I think your stop today was like 5-6 times your reward right?


It was about 4x the reward....but in any case, it was not good. I think I am going to stick with a 12-15 tick stop max and if the ST ergodic crosses its signal line, just bail.....

Yes, after Tuesday, I revisited my max loss for the day. I used to use TransAct as a broker and they had a daily loss limit you could adjust (the broker set it and you could not change it locally) and the system would shut you down and not let you trade anymore. OEC has a feature that you can set on the platform that will shut you down. You are in control of it and thus locally can change it. I wish SC or Vision had that feature.

As to the trailing stop, what I have been considering and may test in sim mode, is to use the ST ergodic as my trip wire. I would enter a trade with a fixed stop and a large target (25-50 ticks for instance) and just stay in the trade as long as the ST ergodic did not cross its signal line. Once it does, cut the trade....

Thanks for the feedback
Papa15

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  #324 (permalink)
 omaha786 
San Diego, California
 
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papa15 View Post

A real difficulty I face is I am a one lot trader and I face the issue of do you trade for a fixed target or do you use a trailing stop loss in an effort to get a larger target. I have always defaulted to using the fixed target method. Each of the trades I took today, I could have gone for a slightly larger target, but I chose to use the smaller targets as I am still "kicking the tires" of this ergodic setup. I want to see it under many different price action scenarios to get a better grasp of how it responds. I would welcome any feedback you folks have on this subject.....it is one I have pondered for a long time.....

Papa15

papa, there is nothing wrong with fixed target as long as the system you are trading has positive expectancy. In-trade management tends to introduce mistakes for 1-lot beginners like us. It's better to shut off the brain than try to out think the market during a trade.

So what fixed target to use? I like R:R=1:1. Why 1:1? If you flip a coin, head go long, tail go short at the market, you should have close to 50% win rate. Now, you have a system, all you need to do is try to improve the system to have higher win rate. Say, you can make your system to have 70% win rate. Does a 70% system make you a guaranteed profitable trader? Not necessary. We are humans, humans are bound to make mistakes. It's too familiar that most of us take trades that are outside of the system rules.

So let's do some math:

Assume your system has 70% win rate. For non-system trades, the win rate is 40% (sounds reasonable?). And you follow the system 80% of the time.

For a system trade, the expectancy is 0.7 - 0.3 = 0.4.

For a non-system trade, the expectancy is 0.4 - 0.6 = -0.2.

Therefore for every dollar risked, each trade makes 0.4 x 80% - 0.2 x 20% = 0.28 dollar.

Is 28 cents good enough? To me it's a very decent number since I know some well known very profitabe traders make well below this number. The key for their success is trading high volume and making a lot of trades.

Once you have a reasonable expectation (28 cents), it might be helpful to think every trade is a winner. Both wining or lossing trades, they all make you 28 cents for every dollar you risked.

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  #325 (permalink)
 papa15 
Wake Forest, NC
 
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Today was not a good day for my trading. I just made stupid mistakes, and the old saying the stupid shall be punished holds true for me today.

I have stated over and over, I am not a counter trend trader. My first trade was a counter trend trade. I thought (note the word thought rather than saw) price would revert back towards the VWAP (note that is the first time you have seen that word on this thread). I read about the VWAP the past couple of days and decided to try it out. Why with real money, I don't know, and will not defend the decision...it was not the right move, it was a very poor decision. As an old instructor of mine used to say, "Poor judgment is being exercised every day somewhere". The stop on this trade was at the bottom of the first bar of the pit session, an inside bar. So I entered short for an inside bar trade. It went my way for a few ticks, then violently reversed, stopping me out. Ok, so now is the move up. I entered and was quickly stopped out. 0 for 3 in just a matter of minutes. I quit for the day.

I am going to stop real money trading for a few days. One reason is I want to really get this ergodic method fully engrained in my subconcious. I feel confident in it, but it needs more run time. I think the time doing that will pay dividends in the long run.

I hope all of you trade well today and have a great week-end.
Papa15

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  #326 (permalink)
 tderrick 
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  #327 (permalink)
 cory 
virginia
 
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papa15 View Post
.. I read about the VWAP the past couple of days and decided to try it out. Why with real money, I don't know, ..
I hope all of you trade well today and have a great week-end.
Papa15

I know why, new toy sounds way more exciting than old toy.

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  #328 (permalink)
 papa15 
Wake Forest, NC
 
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cory View Post
I know why, new toy sounds way more exciting than old toy.

It was a total breakdown in discipline. I was a submarine guy in the navy. You are not allowed to touch/operate something until you have been trained on it and after that you demonstrate to a qualified person that you know the system and understand how to operate it and he then certifies you.....I was not "checked out" on this new toy. I assumed I could use it....my bad

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  #329 (permalink)
 papa15 
Wake Forest, NC
 
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I started this journal last May as a way to hold myself accountable and to help overcome some issues (1. Not trade gaps 2. Honor all stops 3. Improve my trading self discipline).

I am doing well on not trading gaps. I am doing only ok on honoring stops (moving stops is a problem that raises its ugly head every now and then). I am not doing well with self discipline.

In fact, I would say I am doing poorly with self-discipline. My lack of discipline not only impacts my trading but other facets of my life as well. For instance, I tell myself I am going to spend at least 30 minutes a day working out, but all to often I find at the end of the day, I did not do my routine. Another area is dieting and losing weight. Goals and plans put in place, but somehow no progress made. A final example is reading. I have a stack of books a couple of feet high that I need to read, but.....

In trading, I have developed several methods that work well in simulated trading and indeed in real money trading. I had really good success trading breakout/breakdown of inside bars on the 15 min CL chart from June to November. The ergodic method I have recently been using had exceptional performance in simulated trading and good performance in actual trading. But in both the inside bar trading and the ergodic trading, when I deviated from my plan, the results suffered. As an example, last summer I was making good progress with the inside bar results, but there can be long periods when no inside bar forms....too much time on my hands and I started to look for trades to supplement the inside bar trades. Thus can the opening range breakout and half gap closure trades. Those trades produced some winners, but also the vast, vast majority of my losers. It is easy to say " forget the other trades and stick with what works" but I just found it very hard to actually put that into practice. With the ergodic trades, when I stick completely to the most conservative entry criteria, there is hardly a loss. Again, it is easy to say "well stick to those and ignore all the others". I know, that is what I told myself last Saturday, but during this past week, I did some trades that did not meet my conservative criteria.

The issue I am facing is my own lack of self discipline. I am not going to trade real money again until I prove to myself that I can trust myself. I am going to be very formal in laying out objectives in all areas of my life (exercise, diet, reading, devotions, trading, etc) and grade myself against those goals. I have had good intentions in all those areas, but.... I must turn those good intentions into measurable goals and make progress.....

This whole entry is just me talking to me to help me get better. I am being as honest as I can be. If it helps someone else, it is a bonus. I have been struggling with this for a while (I know it comes through in this thread and others have seen it), but it is now for me to go full out to work on this.

If any of you know of something to help improve discipline, please share.
Papa15

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  #330 (permalink)
 omaha786 
San Diego, California
 
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papa, there is a free video here:

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