Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
I will be reaching at least one milestone today - First full month of live trading!!!
I re-read my journal yesterday and some feedback I received triggered me to think very deeply about my trading. Through that thinking I realized that while I think about psychology, I don't actively do as much as I should to improve it.
My journal lists entries, market expectations, etc. But doesn't focus nearly as much on the psychological aspect as it should.
The thing that is holding me back the most are my emotions, so why do I dedicate so little of my journal to combating them?
When I did some internal consulting in my old job, a big part of my job was getting the business and its key departments to understand how we should prioritize initiatives. We used the following slide a lot, now keep in mind this is for an Oil & Gas organization but this is still very relevant for trading.
First you must mitigate anything that could be of significant risk to the organization. In trading this is risk management, I feel comfortable where I am with that on my Gold risk management rules, so don't need more focus on this for now. A lot of traders will agree that this needs to be the first thing you worry about, not losing money.
Then you need to worry about ensuring you are compliant with the regulations. In O&G this is a big deal but in retail trading not so much.
The business impact on these 2 is not to generate additional profit, but to ensure there is no destruction of business value and / or a catastrophic loss (think BP Macondo or blowing up an account in trading)
That stuff is easy to grasp, but the difference between the next 2 was what we struggled with the most when integrating various business functions. Effectiveness vs efficiency
Then you must focus on effectiveness, doing the right things.
We all like to jump straight to doing things efficiently, how can I do this faster? how can I optimize this process? but rarely do we ask, is this the right thing to focus on?
For trading, the effective things would be things such as:
Finding an edge
Keeping your psychology in check
Understanding your market, and how the market functions in general
Lastly, you must focus on efficiency, which is doing those things well / improving on them
For trading, the 'efficient' component is made up of things that allow you to optimize your edge
Finding ways to optimize entry / exit
Finding an indicator that shows you something easier
Making your charts look nice
Journaling
Very rough thoughts here but I'll be thinking about this more and more.
Yesterday's excellence is today's standard and tomorrow's mediocrity
As they say you need to "hit rock bottom" before the big change happens.
Do you already have the feelings "I'm tired of myself" and
" I can't go forward like this ANYMORE ! "
Change for my happened by "hitting rock bottoms".
Couple of examples from past. When I started TST combines I had difficulties
to stick to daily loss limit. It toke apporx 10 blown out combines by violating the daily loss limit.
Before I got disgust of myself, broke the pencil , let the "steam out" and after that
I haven't done it even once ( violating the daily loss limit ).
Same thing was with picking tops and fishing bottoms. It toke more than 100 trades
picking tops and bottoms to get disgust of myself. By now this problem is gone too.
Holding trades to second target was a problem also 3 weeks ago. But I am getting better
and better holding trade to second target.
Be patient it take time to build right trading habits.
The book "The DailyTrading Coach 101 Lessons for Becoming Your Own Trading Psychologist"
Starts with same idea you need strong emotion to make a sustainable change.
Lesson 1: Draw on Emotion to Become a Change Agent
Day was relatively slow with one unexpected move (at least for me) which was a bear move right around lunch time.
My focus today was on my psychology and it was an improvement. There were a number of trades that I wanted to trade that I held myself back from taking, some would've been profitable but I have to remind myself that over a period of time those trades are not profitable.
I'll be finishing up my end of month report soon so that'll show things in my system that I need to tweak.
I wanted to take a trade at the first circle but the volume signs weren't too strong at the time and it hadn't touched my entry area. In retrospect, I should've taken the PDC into account on my area and I might've entered that trade.
I took a long entry at 4760 as I expected to in my plan. The high volume bear move surprised me and stopped me out. It happened so fast that I thought it might lead to a break-down trend so I took the emotional trade there. I took a very low stop though and I was proven wrong pretty quickly. Was this bear move because of Brazil's impeachment? Was someone trying to run the stops below the balance area? I have no idea haha
Second circle- I debated getting into a long position after this but I had just taken a really bad trade so I stopped trading for 5 minutes. By the time I got back I was very strongly considering taking a long position and then made the decision to do it. I made the entry point at 4758.75 as it was around 4759.25 at that time, but it never ended up puling back and I didn't get filled. Oh well.
The last area with the arrow and the X I debated getting in, but I didn't think that the signs were strong enough to warrant an entry, specially after that bear move during lunch time that came out of nowhere. It ended up being a bad call so I didn't read things properly.
Edit- All the blue circles are the areas where I wanted to take a trade but I held myself back from doing it.
Psychological goals today
Only trade within my 'trade zones' - Failed, I took a breakdown trade that was not within my zone. Avoided quite a bit of trades that wouldn't have been in the zone though
Follow my trading plan - Mostly yes, but failed because I took a trade outside of my plan
Let the trade come to me- Failed, I took a break down trade that I chased
Be comfortable with potentially taking 0 trades today if none of my conditions are met- Not as black and white as the others, but the low amount of trades makes me lean more towards 'yeah I was comfortable with that potential scenario'
3 things I did well today
Held myself back from 4-5 trades, 2-3 would've been losses. Overall it would've been a positive net $, but outside of my plan
Laid out psychology goals, it's a start
Took a 'really bad' trade and walked away for 5 minutes. Yes silver rule, you will be a golden rule one day!
3 things I could improve on
Faster decision making, I missed a good entry by about 30 seconds and I didn't want to risk entering with a market order.
Thinking more about unlikely scenarios. Today I felt that the 4755 area wasn't going to be broken and when it was at lunch time under strong volume, I didn't know how to react
Better decision making - I passed on a trade that would've been good, the signs were there but just not that strong. I must've misread something.
Yesterday's excellence is today's standard and tomorrow's mediocrity
So today I reached 2 major milestones in my trading career
Completed a full month of trading, no monthly stop hit, no stopped traing because of frustration, no going back to sim because I sucked. Full month baby!
Achieved my first profitable month!
Psychology-related Moment
It's important to take a breather and enjoy your positive milestones, however big or small they may be. If you are like me, and you want to be the best you can be, it's hard to do this. You are always thinking of how could you have done better, "I made X% but I should've ended at Y%", etc.
Just yesterday I was extremely disappointed with myself because I've been having a rough 5-6 days, and I said that there's no way I was going to celebrate ending positive because I didn't meet my target. And not only that but I'm currently in a 6% drawdown, how can I celebrate that?
The thoughts racing through my head were all negative. I was angry at myself that I did not stick around 10%, I just kept thinking about the trades I shouldn't have taken, and the trades that I should've. I completely forgot that I made big improvements this month. I went from 2/10 positive weeks in 3 months to 3/5 positive weeks. I went from 7-13% monthly losses to a 5% positive month.
While it's good to have a continuous improvement mentality, you can't just focus always focus on the improvements, because you are telling yourself that you are not good enough. You will never be good enough, and while you will be improving you won't be happy. I don't have any research to back it up but I wouldn't surprise if there's a strong correlation between successful long-term traders and happiness. This is something I struggle with a lot, and not just in trading but in pretty much everything I do. Even as I'm typing all of this I see the 5% and I kind of cringe a bit because that's not a number I am that proud of.
Here is a cartoon that I love looking at to remind me how ridiculous I am sometimes.
So let's take a quick pause and smell the flowers without trying to be the flower smelling champion
Ok, done? Let's move on to the part I love, results and numbers!!!! I'm going to be pretty critical about myself here, because feelings have no place in a numbers / fact discussion.
High Level Summary
You know how I feel about the ROI
The win% is definitely lower than I would like, above 40% is my minimum comfort zone
Payoff Ratio is sufficient for now
Expectancy is very low, aiming for much higher than 6.04 but at least it's positive
Avg R and Max Risk are a lot lower than my maximum risk but I'm good with that while I get a hang of things (capital preservation)
Reward/Risk Ratio is quite high, this is probably a reason why my win% and expectancy is so low, I'll need to re-think some of my trades here. Am I going for too many home runs? This is definitely something to keep an eye out on
Let's not talk about my Max DD, I'm currently in it
SQN is no good, need 2+ at least
Now let's get into the meat and potatoes, the numbers that show me what I am doing right and what I'm doing wrong.
Setups Let's start with the setups. I'll be looking at 80%+ of my trade setups along with their respected win%, payoff ratio, expectancy and ruin loss probability. I gotta give credit to @JonnyBoy for introducing me to the risk of ruin matrix, and @MacroNinja for showing me a good way to apply it.
When you look at things like this it's quite easy to know wtf you are messing up on, and what you need to do to correct it. In my case, I need to stop taking the following setups:
GWTF- Holy crap the market is moving in a way that I can't help myself
One thing to note in all of these setups, is that none of them are rational. Every single one of these is triggered by an emotion. Again, reinforcing the fact that psychology is my biggest issue.
Now, the right thing to do here based on this information is to take an extra contract on those that have a very low ruin loss probability.However, I am consciously making a decision to not do this, because right now I am in capital preservation mode. When I am more consistent I will take more risk on those setups with a very low chance of ruin. Also, this month is only one type of market, which was a pretty balanced market. I need more data for some of these setups.
Day of week performance
These numbers surprised me at first, as I was pretty puzzled on the contrast.
Mondays I kill it, 70% wins, 2.82 payoff, 145 expectancy and the least amount of trades. Fridays are not as good but still profitable.
But the middle of the week? wow, why?
My current hypothesis is that Mondays I come in fresh, no losses / pressure from Saturday/Sunday, so I'm level headed. I take the least amount of trades and a high% of those are rational trades, thus my edge shows. But as the week progresses the losses get to me, and it takes me some time to deal with it.
If I were to ever stop trading one day, or sim trade one day then Wednesday would be it. But for now, I need to gather more data.
Direction of Trade Summary
Another risk of ruin analysis. This one shows that I need to stop trading when the market is flat.
10% win, 0.29 payoff and -67.7? Oh yeah risk of ruin is almost certain...
Trend and counter-trend trading I'm comfortable with.
Decision Type Summary
This was the chart that I was the most nervous about. I was worried that this wasn't going to show me what I wanted to see, but it did. In essence, if I stop taking mixed and emotional trades, I am profitable! Sounds easy right?
I found it a bit odd that I do worse with mixed trades than I do with emotional. Not what I expected to see. And only 25% of my trades are rational? yikes.
Trading Errors Summary
Honestly this chart doesn't surprise me at all. I need to do something about my FOMO though.
The losses from FOMO in August were 8.5% of my monthly capital, yikes. If I can get this under control I will be saving myself a lot of money (and headaches)
Time of Day Summary
A quarter of my trades are taken at 9:30 and I lose 80% of those. I need to be less trigger happy during the open
Also I do pretty bad during the lunch hour, maybe I should take a lunch break myself? Yeah I think I'll walk away for a bit. I'll add an outlook reminder for that
Summary of actions needed to improve my methodology:
Stop taking the following setups --> Bull, Bear, GWTF, and 'No Strategy'
Do not trade when the market is flat, you will lose your money 9/10 times
Do not take emotional trades
Do not take mixed trades
Tell yourself that it's ok to miss out, FOMO costs you a lot
Be more cautious during the open
Take a break from 12-14EST - add outlook reminder
Summary of everything Making some progress, got lots more work to do.
PS- Thanks for your understanding on any spelling mistakes / gibberish, I've been doing trading related stuff for 14 hours now and I'm getting a bit tired. Too lazy to re-read / check for spelling mistakes.
Yesterday's excellence is today's standard and tomorrow's mediocrity
I was lazy this morning so I didn't post my journal on here. I still do everything else on my word journal, just didn't post it on FIO. I might as well put it all together into one entry for the day.
I ended barely positive today so my P&L wasn't great, but today was one of those days where a couple of ticks in my favor would've made 40+pts difference. I'm not saying I wish luck was on my side, I take full accountability and honestly I'm not upset about it. Some people have pointed a big gap in my methodology and that is a lack of DOM reading and understanding. This showed today as I would've most likely been able to get better entry points if I was competent in DOM reading, or whatever it is called haha. I will be focusing on this.
Psychology goals
Trade only within my zones - Passed, but this showed me a big flaw that I've got to think about. I'll discuss it in detail in one of my trades of the day
No trades on following setups: Bull, Bear, GWTF, and ‘No Strategy’ - Passed, but I sure as hell wanted to take some of them today haha
Unless you are in a trade, walk away from 12-14EST - Failed, I couldn't resist taking a trade, and I lost it
Here's my morning prep
ON High, 4800 area, Expected strong support
a. LF Short opportunities
b. I can’t see us breaking this today as the market is it would be such a good entry if you are expecting a bear trend after tomorrow’s results
c. Can enter pre-emptively
d. However if the move from the open to this is extremely strong, be very wary
4780 zone, very weak zone, PD High
a. Zone was broken over night and we could be balancing around this so be very careful
b. LF signs that the market is reversing into a bull move, this is probably going to happen in the first hour
c. LF signs that the market remembered this was yesterday’s high and come down
Bottom of balance area, PDL, Low of 19 day low, very strong zone
a. Can enter the bottom part ~4752 preemptively, but be careful with a strong move
b. Watch the market around the blue area but do not enter pre-emptively. If the market is slow then look for strong signs of volume absorption before taking a long trade
c. If market breaks the 4745 area and the move is strong, take a breakdown trade and consider scaling
My trades today:
Premarket Long at 4779 - was expecting things to reverse a couple of points before the open and then move up 10 points once it opened but I was wrong. Mixed trade. Bad read as error, stopped out before market opened.
Short a minute after market opened, I was feeling a turnaround coming soon and I was right. However, I had a bad entry point and needed to enter 1 point later in order to make it to the turnaround. Mixed trade, Bad Entry Point as error. I was targetting a 18 point trade on this one and it would've been hit so that's unfortunate. Right now not looking at the DOM is a big blind spot, and when you enter a fast moving market too early by 1 point and lose an 18+pt trade, it becomes evident how important that is.
Then I took a long at the bottom right where I said I should. 4752.25 with a target of 4770.25. I debated getting into 2 contracts but the move down was so strong that I decided not to do that. Rational trade. Now this trade could've gone very different. When the market was coming back down 30 minutes later, I put in a 2nd long order at 4749.25 because I was very confident in this move. I was one tick away from filling (around the blue circle), and didn't enter with a market order. A 20pt missed opportunity, what can you do haha. Do I hear someone saying learn the DOM? his was the first target I hit all week, pretty crazy heh? I should've moved my target up but I wasn't at my desk at the time. Reminder to set alerts close to my target in case the market moves faster than expected.
My 4th trade of the day was one that was good and bad, but mostly bad. I took a short at 4783 expecting a slight trend reversal after the moved looked to be exhausted. Now my entry point was 4783 because it was the top of my trade here zone, but I really wanted to enter at 4785 instead because the market had already gone to 4786.75 in the morning. I figured 4785 was a good entry because I could set my stop above the 4790 area without taking too much extra risk. Instead I told myself I needed to stick to my psychology goal of not trading outside of my zone. The market moved up to 4789.25 before reversing to 4770 so I obviously made the wrong call.
Thinking about this today made me realize I need to make a change. I want to aim to trade around my trading zones but I need to be able to modify them if the market moves very differently in the first hour. And if I want to take a short at around the 4785 area but my zone only goes up to the 4783, why should I wait for things to come back to my zone? It doesn't make sense because I'm consciously getting a worse fill.
Last trade was a failed breakdown. The market balanced for a while (orange rectangle) so once it broke bear I instantly took the breakdown trade. This was a rational entry. However, 15 minutes in I saw the volume of the move was absorbed and I was telling myself to exit. However, I started hoping that the market would just continue, or someone would step in and slam the market down. There were no signs of that, and I was just hoping. I need to remind myself during those moments that I'm in the trading business, not the hope something happens business. I took a very small risk on this because of the setup so I didn't lose much. But it was a psychological loss!
Summary Today was one of those days were I could've had some very big wins, I was very close! However, the market doesn't care how close you were.
3 things that were positive today
Days like today where I'm very close to some strong trades have gotten me very upset in the past. Today that wasn't the case. Of course I wasn't happy that I missed those, but looking at the positive I had a decent idea of what the market was going to do
Heard the best words a NinjaTrader trader can hear for the first time this week - "Target Filled". Crazy to think that I went 3.5 trading days without hitting a target, but hey first target hit of the journal, lots more to come!
I was very happy with my mindset today, I was ve
ry calm most of the day
3 things to improve on
Learning to read and understand the DOM - Having this tool in my toolset would've made a big difference today, I need to learn this
If a trade doesn't do what I expect I need to reassess a trade as if I wasn't in one. Would I enter into this trade right now? If the answer is no, then exit the trade. If I ever say or think the word 'hope', I need to get out fast
My 'trade zones' rules needs to be tweaked
Yesterday's excellence is today's standard and tomorrow's mediocrity
Unless you are in a trade or market is volatile, walk away from 12-14EST
Prioritize trading around my zones, but you can trade around the zone if it gets you a better fill than being in the zone
No trades on the following setups: Bull, Bear, GWTF, and 'No Strategy'
Walk away for 5 minutes if you take a 'really bad' trade
If you find yourself staring at price and it's moving very slow, you are likely anxious. Set alarms in NinjaTrader and walk away to calm your anxiousness
If the word 'hope' ever runs through your mind, exit a trade. I 'hope' someone steps in and turns this around? Exit. I 'hope' the trend continues? Exit. If the word 'hope' comes in it is because you are no longer confident in the trade
2- 4835 zone, AT High, top of balance area, tested twice strongly, held strongly
a. LF signs that this will break if we have a strong bull trend day
b. LF signs that the move will end / reverse if the market isn’t as strong
c. If market slow, you can short pre-emptively
d. If market is fast, do not enter pre-emptively
3- 4815 zone, top of Friday, surprisingly has held consistently over the 20 day balance
a. LF signs of reversal here
b. Do not enter short / long position unless volume gives you the right signs
c. If this gets sliced fast, scale up or enter a long position
4- 4800 zone, high of week, has showed some reversals last few days. Weak zone, be very wary of entry
a. LF slowing of a move
b. IF report is really bad, consider taking a long here
c. If report is really good, take a short here and could potentially pre-emptively enter
d. Be careful of balance around this area today
5- 4750 zone, bottom of 20 day balance area, PDL, Strong zone, tested 3 times last 2 days
a. Zone has shown signs that it could break. Be careful about pre-emptively entering this
b. If we break out of this fast, expect b-down and scale in
c. Do not enter blue line area pre-emptively, only if strong volume
6- Pink zone, Before broken it was the top of balance area dating back to November. Broken post-brexit
Could be at play to slow things down if we reach it today, although a bit of a stretch. Jobs report would have to be 200K+ for the market to strongly consider a rate hike in September
Edit: 9:19 Post Jobs Report
Jobs report came out and was a lot weaker than I expected, and weaker than the market expected. The market shot up with very little resistance. This is a time when bad news is good news. We could have a bull trend day today if we find little resistance. AT highs could be likely to break or get close too.
However, one thing to take into account is that some LT players might still see too much uncertainty with September as well as the upcoming elections, this could be a good time for them to liquidate their positions if they still have any in the market.
Don't just assume that because the jobs number wasn't 200K+ that there is no chance for a bear trend.
Read the market, want what the market wants. Don't focus on being right.
Be careful about taking too many back to back trades, and look to see what the overall volatility is.
Remain calm today, don't let fast or big wins get to you, same goes for losses. There could be many opportunities today for EITHER WAY, so keep an open mind.
Yesterday's excellence is today's standard and tomorrow's mediocrity
2 great entries today, 2 really bad scale ins = bad day psychologically and $ wise so far
Premarket entered at 4798.50, my initial target was 4816. Unless the open was very aggressive I wasn't planning to scale in.
However, all of that went out the window and I bought a market order at 4807.75. Then laid my stop at 4799.75 for both of the orders. Within 5 minutes the market dropped to 4799.25 and took my stop out. Ended net negative on that trade.
I was pretty angry that I scaled in but I felt the market was going up again, so I took a long position at 4802.75, good entry. I was going to get out at 4714 and the market trended that way. The market made it to the top of my very strong resistance zone that I laid out in my plan, but I thought the volume wasn't strong enough to counter this trend. I stuck by my entry and when the market dropped a bit I bought at 4811.50. Then I moved my stop to just above break even which was 4807.50. Well the market came down and my stop was filled.
Error = greed
The market is not explosive, why am I scaling? the current range of the RTH is 20 points, why am I scaling? I should've only made one trade today, maybe 2. Entry at 4798.5 and exit at 4814. Maybe a short at 4816-4817, but that's it. None of this scaling.
Yesterday's excellence is today's standard and tomorrow's mediocrity
Unless you are in a trade or market is volatile, walk away from 12-14EST - Passed
Prioritize trading around my zones, but you can trade around the zone if it gets you a better fill than being in the zone - Failed with scale ins
No trades on the following setups: Bull, Bear, GWTF, and 'No Strategy' - Failed, took a bull emotional as my 2nd scale in
Walk away for 5 minutes if you take a 'really bad' trade - Passed, did it twice and walked away twice
If you find yourself staring at price and it's moving very slow, you are likely anxious. Set alarms in NinjaTrader and walk away to calm your anxiousness -Done
If the word 'hope' ever runs through your mind, exit a trade. I 'hope' someone steps in and turns this around? Exit. I 'hope' the trend continues? Exit. If the word 'hope' comes in it is because you are no longer confident in the trade -
Summary: I had much bigger expectations for the day and I focused too much on that. I traded what I thought was going to happen, not what the market was telling me. This led me to scale into trades that I shouldn't have scaled into, because the trading range today was going to be a lot smaller than I expected it to.
3 things I did well
Walked away when I wasn't trading well
No 2nd or 3rd
3 things I could improve on
My scaling, I am not very good when it comes to scaling into trades. All my scale-ins are emotional and I tend to get in at a high area only to see a pullback that takes my stop out
Forcing my thoughts into the market
Greed. I don't need to take homeruns just because I'm in a long DD, small losses got me into this DD, and small wins can get me out
Yesterday's excellence is today's standard and tomorrow's mediocrity
