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Papa's Trading Journal

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  #521 (permalink)
jzw22
London, UK
 
 
Posts: 50 since Apr 2012
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papa15 View Post
...I have focused in on 3 main points that have been the fundamental reasons for my having so much difficulty getting positive traction in the market.
..

I think that points 2 & 3 are really symptoms of the underlying problem. To me it sounds like the problem is you don't want to accept that you will have losing trades (loss aversion). Moving stops & trading for small targets with wide stops are both ways of having a high win% in the short run.

They give you the illusion you are a successful trader when in fact you are just playing russian roulette with your account.

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  #522 (permalink)
 papa15 
Wake Forest, NC
 
Experience: Intermediate
Platform: Sierra Charts, Investor RT, Ninja Trader
Broker: VanKar
Trading: NQ
 
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jzw22 View Post
I think that points 2 & 3 are really symptoms of the underlying problem. To me it sounds like the problem is you don't want to accept that you will have losing trades (loss aversion). Moving stops & trading for small targets with wide stops are both ways of having a high win% in the short run.

They give you the illusion you are a successful trader when in fact you are just playing russian roulette with your account.


The truth is indeed in those points. It is mainly contained in the word ego, or put it another way, pride. Who wants to be wrong? And in trading, you are not officially wrong until you close the loser (or so you can reason with yourself). There have been many trades that went against me a fair distance that turned around and then went profitable (and there were many trades that I finally cut that turned around and hit my profit targets). Seeing these actions can ingrain some bad habits in your mind....it is those bad habits I am focusing on undoing.

If I enter a trade based on a setup, as soon as that setup is invalidated, the trade needs to be cut. If I enter long and expect the market to go up, but instead I see a very bearish market reaction, I am wrong to be in the trade and need to just move on. I have had a fair amount of difficulty doing that since I knew if I took the loss it would take several trades or days to recover.....If instead, the next trade wipes out the loss, then it is easier to get out of the bad trade. It seems so obvious, but it has taken a while to get into my thick skull.

My focus in this journey is not to discuss specific trade setups (it is not about indicators or charts), rather it is on the proper execution of a trade, especially the money management.

My focus is on:
1. Avoid the opening chop.
2. Honor stops
3. Ensure reward > risk on all trades
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  #523 (permalink)
 papa15 
Wake Forest, NC
 
Experience: Intermediate
Platform: Sierra Charts, Investor RT, Ninja Trader
Broker: VanKar
Trading: NQ
 
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Posts: 527 since Sep 2009
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PandaWarrior View Post
I think you've hit on some of the most important issues you can face as a trader.....I look forward to hearing more about your journey...

Recently, I've been focusing on a consistent way to determine market state. Its been a flip of the coin up til now....I've been focused so long on the entry then the exit that I forgot to make sure I had a consistent method to determine if I should even take the entry, let alone the exit.....

Good luck on your journey to improve these issues.


I am interested in your view of determining the market state...that really is an important topic. I recently started a spreadsheet that takes high/low/close and calculates several items, mainly pivots and stuff. But I also compare today's range vs yesterday's on a percentage basis. It is rather crude, but it gives a fair idea of what sort of day tomorrow is likely to be....ie: if today's range is less than 50% of yesterday's, you can expect tomorrow to be a "break out day". If today's range is 1.25 of yesterday's, then tomorrow is likely to be a range bound day. Not perfect, but it gives some clue as to what to expect.....

My way of looking at market state is to compare the calculated pivot of tomorrow to a 3 day average pivot. If tomorrow's is higher, than I expect the market to have a bullish bias.....that is as sophisticated as I get, so if you come up with something, would love to know it.....

My focus is on:
1. Avoid the opening chop.
2. Honor stops
3. Ensure reward > risk on all trades
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  #524 (permalink)
 PandaWarrior 
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papa15 View Post
I am interested in your view of determining the market state...that really is an important topic. I recently started a spreadsheet that takes high/low/close and calculates several items, mainly pivots and stuff. But I also compare today's range vs yesterday's on a percentage basis. It is rather crude, but it gives a fair idea of what sort of day tomorrow is likely to be....ie: if today's range is less than 50% of yesterday's, you can expect tomorrow to be a "break out day". If today's range is 1.25 of yesterday's, then tomorrow is likely to be a range bound day. Not perfect, but it gives some clue as to what to expect.....

My way of looking at market state is to compare the calculated pivot of tomorrow to a 3 day average pivot. If tomorrow's is higher, than I expect the market to have a bullish bias.....that is as sophisticated as I get, so if you come up with something, would love to know it.....

Mine is a lot simpler than that...I am looking for intra day swings....sometimes it lasts all day like today but other times there is multiple shifts in market state.....

Since I don't want to embarrass myself here, I'll send you an email with some links to a recent study I completed and you can see for yourself...

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #525 (permalink)
jzw22
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papa15 View Post
.. There have been many trades that went against me a fair distance that turned around and then went profitable (and there were many trades that I finally cut that turned around and hit my profit targets). Seeing these actions can ingrain some bad habits in your mind....it is those bad habits I am focusing on undoing.
...

There is a great quote by William Eckhardt in the market wizards book which is something like - the market tries to teach you bad habits by frequently rewarding bad decisions.

The reality is that most of the time the market is in a range. If you take a trade at a level and wait long enough price will come back to that level. But it only takes one time that it doesn't to blow up your account.

99% of trading psychology is how to deal with losses. There are probably 1000's of posts on this forum talking about this subject.

Trying to stay focused on the making good trading decisions and ignoring daily $ and win% is what I try to do - but its a constant struggle. If I'm not confident or get tired its easy to slip back.

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  #526 (permalink)
 papa15 
Wake Forest, NC
 
Experience: Intermediate
Platform: Sierra Charts, Investor RT, Ninja Trader
Broker: VanKar
Trading: NQ
 
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Posts: 527 since Sep 2009
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jzw22 View Post
There is a great quote by William Eckhardt in the market wizards book which is something like - the market tries to teach you bad habits by frequently rewarding bad decisions.

The reality is that most of the time the market is in a range. If you take a trade at a level and wait long enough price will come back to that level. But it only takes one time that it doesn't to blow up your account.

99% of trading psychology is how to deal with losses. There are probably 1000's of posts on this forum talking about this subject.

Trying to stay focused on the making good trading decisions and ignoring daily $ and win% is what I try to do - but its a constant struggle. If I'm not confident or get tired its easy to slip back.

You really hit the nail on the head in all your points.....

My focus is on:
1. Avoid the opening chop.
2. Honor stops
3. Ensure reward > risk on all trades
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  #527 (permalink)
 papa15 
Wake Forest, NC
 
Experience: Intermediate
Platform: Sierra Charts, Investor RT, Ninja Trader
Broker: VanKar
Trading: NQ
 
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Posts: 527 since Sep 2009
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No cash trading today. This is options expiration week and market volatility is a bit higher recently. We are near the sell in May and go away point. My main trading instrument is NQ, and it is heavily influenced by 2 stocks, Apple and Google. NQ has been on a tear since late December, rising as Apple's stock price has essentially gone up, up, and up......until recently.

Probably back to cash on Monday....

My focus is on:
1. Avoid the opening chop.
2. Honor stops
3. Ensure reward > risk on all trades
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  #528 (permalink)
 papa15 
Wake Forest, NC
 
Experience: Intermediate
Platform: Sierra Charts, Investor RT, Ninja Trader
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Posts: 527 since Sep 2009
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Back to cash trading today.

I spent a lot of time looking over past results. If only I could undo about 5 trades, my results would be so much, much better. Well, I don't have a time machine that will allow that, so the next best thing is to fix the issues that caused those bad trades.....and let the results make up for the lost ground.

I did 3 trades on NQ today and quit. The first trade was at 9:55 and was a break of the first 15 min candle low. Price action became a little sloppy after entry, and I suspected buyers would try to take the market back up, so I cut the trade a little earlier than my original target. Conscious decision. No regret.

The second trade was at 10:14. Looked like price had bottomed and was going to make a pullback. I did a counter trend trade....not a real strong suit of mine. My logic was again the market had sold off quite a bit and a pull back was in order. Price had closed back above my bearish target zone and there was room to the down sloping moving average zone. This was a quick hitter.

The last trade was at 10:41 and was a break of the first hour low. Another fairly quick hitter.

I have some projects to do, so limiting the screen time today.

One last note. If you have read this thread at all, you know I want to trade on something other than Microsoft Windows. Just a personal quirk. (as a side note, my Windows 7 laptop gave me a BSOD over the weekend....really hate those). I have used Sierra Charts on Linux in the past with good success, but starting between Thanksgiving and Christmas, I started having problems. That drove me back to Windows based trading....but thankfully, the Good Lord gave me an idea to try yesterday and it seems to have fixed my Linux problems. Rithmic just did not like the Sierra Charts NoCLR versions. Once I installed .net 2.0 and vcrun 2008, Sierra Charts ran fine.....makes me a very happy camper. I am sure it does not make a hill of beans difference to anyone else, but it floats my boat.

I have attached a snapshot of my short term trading chart....the other chart I use is a 15 min candle stick chart.....

My focus is on:
1. Avoid the opening chop.
2. Honor stops
3. Ensure reward > risk on all trades
Attached Thumbnails
Click image for larger version

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Size:	101.0 KB
ID:	70937  
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  #529 (permalink)
 papa15 
Wake Forest, NC
 
Experience: Intermediate
Platform: Sierra Charts, Investor RT, Ninja Trader
Broker: VanKar
Trading: NQ
 
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Posts: 527 since Sep 2009
Thanks: 583 given, 1,246 received

Only 2 trades today. The FOMC 2 day meeting starts today, with announcement tomorrow. It has been a while since I consistently traded index futures, but my memory tells me the markets are generally quiet until the announcement. Based on that I expect a reasonably narrow range today. After hours, Apple reports earnings and since it is the NASDAQ big dog (about 10% of its weight), it can be a real market mover tonight and in the morning,j and then the FOMC announcement.....later this week should have a lot of movement.

Any way, this morning I noticed price had fallen based on the Case-Shiller index. It started to show some signs of going up after 9 am. At 9:30, I watched prices for a minute or so, saw prices go down. I put in a buy stop above the one minute bar and took a 3 point win with little heat as price turned back up. I had a tight stop, and watched to make sure I was not trapped in opening chop. This was not really a gap fill play, but I did see the Gap Guy's daily wrap yesterday that said gaps before the FOMC meetings have a tendency to fill. This was a deliberate decision trade based on price action and I was ready to cut the trade if price did not do as I thought it should.

The second trade was at 10:05 and was a break of the first 15 minute bar. Housing news came out at 10 am and must have been perceived as positive. Good strong push up to hit the target quickly.

My grading scale has 2 components. One is Green or Red. Green for a profitable day/Red for a losing day. Today was Green. The second component is a score on discipline. A very disciplined day can get 3 points, a good discipline day can get 2 points. A yellow day gets 1 point and a red day gets -3 points. I judge those days based on my discipline at following all my rules/guidelines. Today, was a 3 point green day.

My total for the month after 8 days of trading is only 7 points, so I have had a couple of rough days earlier....

My focus is on:
1. Avoid the opening chop.
2. Honor stops
3. Ensure reward > risk on all trades
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  #530 (permalink)
 Big Mike 
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