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Bear Down! Trading Journal

  #21 (permalink)
 
Dabears2322's Avatar
 Dabears2322 
Chicago, Illinois
 
Experience: Beginner
Platform: ThinkorSwim
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mastercraft29 View Post
Trading real money versus sim mode is very different. I believe the psycological part of trading is the hardest hurdle to overcome. You must master yourself before you can master the markets. This is another reason why i suggest trading forex versus any futures market. You have to trade the "I dont care size" so you can be objective and handle a series of losses.

The price action in the EUR/USD is the same as any futures, stock, ETF, bond, or any other market you can think of. Price action is universal; the institutions cannot hide what they are doing and leave foot prints (which is what price action is). Just look at a chart from 10, 50 or 100 years ago. Price action is based on human behavior and is part of our DNA (people behaving similarly in similar situations overtime). Once you understand price action, the traders equation and the market cycle, you can trade any market. With that being said, all markets do have their own tendencies so it is prudent to study any market before entering it.

If you are going to trade forex you need to open an account with FXCM. Commissions are $0.08 per 1000 lots (which is $0.10 a pip). The commission structure you mentioned at TD is too high and will cost you too much (you would have to make 10 pips just to cover commissions at $1.00 / 1000 lots). I am not positive but I think TD is a broker similar to an Etrade or Scotts trade, which day traders (or any true trader) do not use due to the extremely high and unrealistic commission structures. These brokers are just like your 401K account holder and just out to steal your money, so stear clear.

As for your comment and idea about scalping a second contract for a few ticks. You are ignoring the traders equation and you will lose money. You should not look for any profit target less than 1 point (2 for a beginner with a 2 pt stop loss) in the ES, or 10 pips in forex (minimum scalps). Just do the math and you tell me what happens after you take 10 trades (see below). Not to mention if you are not successfully trading one contract you should not even consider trading two. I know you have heard of high frequency trading firms scalping for a single tick, but they have a huge advantage over you (time, market entries, computer algorithms with no emotions just to name a few).

Lets say you trade 2 contracts, 2 point profit target on one and 1 point profit target on the second, with a 2 point stop loss on the entire position (4 points). Over the course of 10 trades this is your traders equation (assuming every trade you enter is a 60% setup).

Risk (4 points) x probability of loss (0.40) = 16 points lost
Reward (3 points) x probability of reward (0.60) = 18 points gained
Total net profit after 10 trades 2 points, $100
After commissions (assuming $3.50 / contract per trade) -$70

You are now left with a $30 profit assuming you manage every trade 100% correctly and with no errors, and assuming you win 60% of the time (both very hard to do). So this is essentially a breakeven strategy and you would need to win atleast 70% of the time to make a profit. Do the math for scalping at 1 point with a 2 point risk and you will see again that you have to win 70% of the time (TO BREAK EVEN!!) which is extremely difficult to do.

I hope this does not sound rude, or you think I am a jackass. I am truly just trying to help you understand, gain from my personal experience, and lead you in the right direction to make it in this business. There is a reason why 90% of people fail in this business and the number 1 reason (i believe) is not understanding the math and ignoring probability (only focusing on risk and reward). Along with all of the crooks out there selling you their indicators, or BS trading strategy that lead people down the wrong road.

That's not rude at all, man. I need all the advice I can get and really appreciate it. Don't hold back!

I'm about to run out of the house so will give you a reply in a few hours.

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  #22 (permalink)
 
Dabears2322's Avatar
 Dabears2322 
Chicago, Illinois
 
Experience: Beginner
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@mastercraft29 my only hesitation with going with fxcm is that I will have to pay for NinjaTrader, unless you have experience with the free version. The commissions at TD are ridiculous but I picked them because I could paper trade on their free platform which also functions pretty well. If the free version of NT is good enought then I will look into switching over.

For the scalping stuff, I agree with you that that strategy is pretty risky and wouldn't work. The only reason I brought it up is because I noticed that with my strategy and the charts I use, when I get a signal to enter the market it seems that every time price will go in my direction at least 2 full ticks up to the bid within a short period of time. I wont do this in the sim for at least a month while I track the movement in my sheet, but the idea would be to take a quick 2-3 tick profit with 1 contract to take some overall risk off the other contract. But if the market goes the other way then I'm screwed in terms of risk. And when I'm live the fills will be much different so this will be even harder. I will probably never do this but thought it would be interesting to ask. I'm still going to track it.

My average winning trade right now is 1.64 points. So the first contract would go for 2-3 ticks, 2nd would remain the same strategy as right now. I would also set a 2 tick stop for that first contract, so RR would be about 1. Not sure if this makes a difference.
In ticks
Risk(2) x Prob(.4)= .8
Reward(2) x Prob(.6)= 1.2

This equation still wouldn't work out and would tell me not to do this trade. The only way for this to work is if the probability of a win was huge, and I guess that's what I'll be tracking in my sheet. To be clear, I wouldn't start considering doing this type of thing live for a long time.

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  #23 (permalink)
 mastercraft29 
central florida
 
Posts: 192 since Jul 2014



Dabears2322 View Post
@mastercraft29 my only hesitation with going with fxcm is that I will have to pay for NinjaTrader, unless you have experience with the free version. The commissions at TD are ridiculous but I picked them because I could paper trade on their free platform which also functions pretty well. If the free version of NT is good enought then I will look into switching over.

For the scalping stuff, I agree with you that that strategy is pretty risky and wouldn't work. The only reason I brought it up is because I noticed that with my strategy and the charts I use, when I get a signal to enter the market it seems that every time price will go in my direction at least 2 full ticks up to the bid within a short period of time. I wont do this in the sim for at least a month while I track the movement in my sheet, but the idea would be to take a quick 2-3 tick profit with 1 contract to take some overall risk off the other contract. But if the market goes the other way then I'm screwed in terms of risk. And when I'm live the fills will be much different so this will be even harder. I will probably never do this but thought it would be interesting to ask. I'm still going to track it.

My average winning trade right now is 1.64 points. So the first contract would go for 2-3 ticks, 2nd would remain the same strategy as right now. I would also set a 2 tick stop for that first contract, so RR would be about 1. Not sure if this makes a difference.
In ticks
Risk(2) x Prob(.4)= .8
Reward(2) x Prob(.6)= 1.2

This equation still wouldn't work out and would tell me not to do this trade. The only way for this to work is if the probability of a win was huge, and I guess that's what I'll be tracking in my sheet. To be clear, I wouldn't start considering doing this type of thing live for a long time.


You dont have to use Ninja trader, i do but if you dont want to pay for it the FXCM platform is fine. I dont use it regularly, but i do have it on my computer and phone and have before. I think its actually probably better than some of the charting software out there from what i have seen, but i only have experience with NT.

As for your scalping idea, it does sound logical and the traders equation you posted is better, but mathematically it is very difficult to do (to use a 2 tick stop is nearly impossible). However there are traders out there who do trade like this (Paul Rotter for example), but understand these are the exception and not the rule. Also, most of them i would assume are using algorithms and not discretionary traders. Watch these documentaries on HFT firms, very interesting stuff; and it will show you what you are up against when you try to do what they do. It is part of a series, i think there are 3 total.

Forex Trading Systems - High Frequency Trading Programs Documentary


Algorithmic Trading– Impact of Automated Trading Programs On Markets Documentary

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  #24 (permalink)
 
Comeback King's Avatar
 Comeback King 
Tampa, FL/USA
 
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Platform: TradingView
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2 big problems with scalping in that time frame, fills and commissions. The big institutions have parked orders all up and down the order book and they get the first fills. Generally for them a loss is an exit at break even minus commissions which for them is pennies. A win is a tick or two, $12.50 or $25.00. So when they win they get $12.50 and when the lose they lose pennies. You can survive for a long time with that structure even with a terrible win rate.

The fact is that you won't get those fills on either side of the order. You'll be at the back of the queue to get in and the back of the queue to get out. You'll be bleeding ticks on either side. You add that slippage in with the cost of your round trips, $3.50 or $4.00 or whatever and you'll just end up dying a slow death by a thousand paper cuts.

It might be possible to scalp for ticks as a mouse trader in some futures markets but you'll need deeper pockets, a big appetite for risk and you'll need to do it somewhere other than the ES.

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  #25 (permalink)
 
Dabears2322's Avatar
 Dabears2322 
Chicago, Illinois
 
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Thanks for the replys, guys. Interesting stuff. I'll check those videos out asap.

All of that makes sense. It's not worth the trouble and risk. Interesting to think and learn about the inner workings of the markets.

Was traveling Friday so wasn't able to trade. I start classes Tuesday so won't be as active here but will do my best and develop a schedule as I get a routine going.

Sent from my SAMSUNG-SM-G891A using Tapatalk

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  #26 (permalink)
 
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 Dabears2322 
Chicago, Illinois
 
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Wasn't able to trade today, but after going through the markets, it looks like today could have been a very profitable day. Very trendy with minimal chop.. Might have some time in the morning tomorrow, but most likely will not. Thursday should be wide open.

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  #27 (permalink)
 
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 Dabears2322 
Chicago, Illinois
 
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Too busy today. Looks like it was a huge day. S and P and Dow knocking on the door. Today would have been a HUGE day for my strategy. Big sustained up trend. Hopefully I can get some action like this on thursday.

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  #28 (permalink)
 
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 Dabears2322 
Chicago, Illinois
 
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Got a quick hour in today. US markets were banging higher so I wanted to get in on the action.

Trade 1: Long 2289, out at 87.75. -1.25

Trade 2: Long 2288.50, cover @ 91.25. +1.75. Should've trusted my gut here and went for more of a swing trade with higher target, but hindsight is 20/20. Missed out on another 2 points. Can't get them all. +1.75

+.5 on the day at 11:15.

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  #29 (permalink)
 
Dabears2322's Avatar
 Dabears2322 
Chicago, Illinois
 
Experience: Beginner
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Got some time to trade this morning from the US open until about 12 ET. Unfortunately it was a range day with only a 6 point range, so it was tough. Was expecting some chop today since the last couple of days have been huge up trends. Won't have any time tomorrow so looking forward to get some good time in next week to really get a good sample size of different types of days for this strategy. Was able to pull out above B/E but this is obviously not good enough.

Trade 1: Short at 2292, puked at 2293.50. Thought support was failing so got in. Was a lower probability trade but was willing to take it. Follows my rules but didn't work out. About a 1R trade. -1.5

Trade 2: Bought at 93.25 right after I saw the reversal. Fit my strategy perfectly. Unfortunately I cut it short and moved my target up because I got nervous of losing 2 trades in a row. I can't be doing this if I want to be consistently profitable. Ended up running another 2 points. a .83R trade. +1.25

Trade 3: Went short at 93 and barely got stopped out. Set the stop at the previous swing high instead of a tick above. Fit my strategy and really liked the set up and would've worked out. 1.42R. -1.75

Trade 4: Trusted the set up and got short again after I got stopped out. Got in a little later than I would've liked but fit my risk parameters at 93.25. Ended up being a 2.16R trade because I saw the market breaking down and truly trusted myself. I am gaining a little more confidence in that way every day, even on some losing trades. Great decision and great profit target. set it at 90, it hit, ran 2 ticks through and reversed for the rest of the day. On the screenshot of the chart you can see the green arrow just under that low of the day, but the price and size isn't coming into the picture. I'll zoom out to show it in a different shot. +3.25

End of day: +1.25

Overall decent day for such a tight range day. Trade at the end made up for it. Glad I had confidence in myself. When I made the trade I set the target and stop order and just left it. Closed the screen and walked around so I wouldn't touch it. I have to get better at not messing with my targets and just letting it ride. The confidence is coming, but is not even close still. Still learning a ton and appreciate the help from all of you guys!




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  #30 (permalink)
 
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 Dabears2322 
Chicago, Illinois
 
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Was able to get in front of my computer for a little under an hour at 10 AM. Would've been a great day to be able to fully trade, but had class all day.

Market gapped down after coming off new highs right at that 2300 level. Probably some consolidation going on and some concerns by the recent Trump news.

Trade 1: Short at 67.75. Cover at 66. Could sense that the market was getting to the bottom of its range but thought it had more room to go down. Wanted to ride the trend a little more. Got in and out 2 minutes. Good trade. 66 was a key level for the past week+ so set my target there. + 1.75

Trade 2: Just a dumb trade based off the movement of the market and not really on strategy. Only risked 3 ticks. -.75

Trade 3: I was leaving for the day and wanted to let something run as I thought we were at a key support area. Set 2 different buy orders with stops and target brackets. Bought at 68.75 and 65.50. Sold at 67.25 and 71. Not completely a part of my active strategy but wanted to get a longer term trade in to see how it would go without my interference. THis one helped boost my confidence with identifying good swing trade areas. +4

+5 on the day. These trend days will be very good with this strategy once I can trade a full day.



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Last Updated on January 24, 2018


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