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Zen & the Art of The Small Account
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Zen & the Art of The Small Account

  #301 (permalink)
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aztrader9 View Post
Funny you mention surfing, one of my buddies is a surf dude in CA. He said the best surfers take only the best waves and the beginners take every wave that comes along. The good ones sit out in the water counting waves because they know a good one comes along every 7-8 waves or so. They ride it in, swim out and wait for the next one......Wait for the good one.....

Cheers..

What an excellent statement. I have to put this one up on the wall to remind me. Thanks for sharing it with us.

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  #302 (permalink)
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tmmaggi View Post
What an excellent statement. I have to put this one up on the wall to remind me. Thanks for sharing it with us.

You are welcome.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #303 (permalink)
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Forex! Your Kidding!



Swamp Yankee View Post
AZ,

For me trading with a small account right now is nothing but a blessing. I think its crazy cool that you can get an account at at an established ECN broker and trade forex without risking big money. Forex might be a tougher market to trade in some regards, but it is also the biggest pool of liquidity on this planet. To be able to participate in it with small size is a gift.

"Its all in your Head"

For a small account, right down to $500, forex is THE market to trade. ....Why?

1) Ability to trade any size even to the micro level at almost any time 24h/5.5d. Creative Scaling, whenever!

(You can even trade 1/10 of the size that the CME offers with its Micro currency contract, down to 10cent/pip )

2) Enormous liquidity, mother of ALL markets.... it dwarfs the donkeys most others try to push.

3) The moves are strong and trending, 4-5x typical moves in most future contracts, a camel.... easily.

(Take smaller size farther! Less anxiety..Chance to improve account stats and performance, before levering up)


4) Multiple Market Opens and Closes around the globe= Multiple Opportunities.

5) Globalization: Ever increasing necessity and participation.

6) Currencies are tough to corner, manipulate, or dominate sustainably.

Just an all around better trading product for the challenged small account.

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  #304 (permalink)
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First day back live!

9/7/2010, 9:59 AM

Went back live again today and will never be on sim again unless I blow the account out. However, I feel pretty strongly this will not happen.

The key is mental and emotional discipline. Over the weekend, I came to terms with only being live from now on. It made a huge difference in how I approached the day today. While the actual trade results are flat for the day, the emotional achievement is huge.

Last week I started volunteering at my daughters school one day a week, I did and will continue to do some volunteer work at my church and today at 10:30 or so, I am on my way to meet with some guys to talk about starting a micro finance program in the border town with Mexico where we live. We will provide some basic funding and business expertise about how to manage inventory, basic bookkeeping and budgeting. This is what I am made for. Trading is just my means to an end.

My system performed well. It is a bit harder to trade it live as all systems are but I had no jackhammer heart beats today, no nervous nellie symptoms at all. I made two mistakes and both were patience mistakes. The first was not holding my trades to the exit signal and the other was not waiting for a signal to fully set up. I anticipated by a tick or two and while my stop was close, the trade was a no go from the beginning. The close stop prevented a much larger one.

In about 10 minutes I will be away from the computer for the rest of the day. I think this is a key to successful trading. Do your work, then leave and forget about it til the next day. I know others will take me to task on this but I don't care. Clearing your mind allows your subconscious to work on things for you and not allowing yourself some away time each day will not help matters.

Grades for today:
Following my entry signals. A: even though I did not take all of them, the ones I took were perfect.
Exit Signals: F
Emotional and mental prep: A
Patience: C due to the early trade and not holding the trades I did enter. However, I did sit through some really nasty chop and only got suckered once. Two weeks ago, I would have been slaughtered.

Areas of improvement:

1). Hold the trades: This will come as I trade only live money and get more comfortable with that.
2). In the No Man's land area of my chart, be even more patient to wait for the real trades to set up. I kept looking for a set up in the chop when I should have not been wasting my time and instead just kept looking for the real one I knew would come. It did but I was done by then. No worries.

Tomorrow will work on these two things.

Cheers.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris

Last edited by PandaWarrior; September 7th, 2010 at 02:59 PM.
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  #305 (permalink)
Just starting out...
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Questions

Thanks for letting me look into your trading thoughts i to have a small account and i also trade the CL,TF & GC. I was wondering how many contracts do you trade and if they are aiao or scale? What are you targets for a trade and for a day or week? I know each trader will have their on plan but i'm trying to get a feel for my plan being on the right track. Thanks again for the insight.

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  #306 (permalink)
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rfharris View Post
Thanks for letting me look into your trading thoughts i to have a small account and i also trade the CL,TF & GC. I was wondering how many contracts do you trade and if they are aiao or scale? What are you targets for a trade and for a day or week? I know each trader will have their on plan but i'm trying to get a feel for my plan being on the right track. Thanks again for the insight.

Thanks for stopping by, I appreciate it.

Before answering the questions, you have to decide for yourself if you have a real edge to trade. The edge MUST include BOTH entry and exits otherwise its just an entry system. Assuming you have an edge, is it a trend following system, a scalper system that targets only a few ticks, etc.

Further assuming it is a trend following system designed to capture intra day trends like we see on CL, then I can answer the questions as follows:

1) Currently one contract and will add one every time I double the account size until I am trading ten and then will stay with that for a bit to get used to the size.

2) Currently I am aiao. As I trade more size, then I will begin scaling out at certain points. And once I achieve consistency with ten contracts, I will then begin to scale IN and not out. The best traders I have ever studied scale IN and exit in one big order assuming they are not trading hundreds of cars. If they do, they scale in and out. But for me, I think I will scale in on the pull backs in the trends. That is down the road a bit and so I am content to be aiao for now.

3) Targets. This is a gray area. I used to have fixed targets and this got me into the habit of demanding certain things from the market. As you know, the market does not respond to our demands very well if at all! The key here is your system. IF it has both entry and exit signals and it should before it is a valid system, then targets will ALWAYS be variable. Under this scenario, your system may give a signal, give you ten ticks and then an exit signal. You should take it. The next signal may give you 100 ticks before an exit signal occurs like today on CL. This is another reason I am aiao for now. It produces the greatest profit per trade assuming you hold the trade until the signal comes to exit. That being said, if your system incorporates support and resistance like Murray Math, fib retracements, pivots, etc, you may consider using those as "fixed" targets. However, that must be taken in the context of price action, your main system's signals and your comfort level holding trades for long periods of time.

One thing I am learning to embrace is this; the market can move farther and faster than I am prepared to accept occasionally. If the fixed target is 100 ticks away and your system says it is in play, then hold the trade that long until the system says it is no longer in play. You will be surprised how often those kinds of things happen when it seems impossible. I think big targets are tough for day traders because most of us are not used to seeing them in our P&L every day and so we think we can't achieve them. And if you think you can't, you won't.

4) Daily targets: I have them but in this context, I will not share them because they are immaterial to your system. But I believe the bigger question is this, do you trade well each day even if you lose money that day? And if you do trade well each day, then your week should be profitable and so should your month. If you trade your edge perfectly each day and you are not profitable, your system sucks and its time to find another one. Otherwise, if your edge is valid, then your only goal is to trade it well each day. Thats it. The money will follow.

5) Something you did not ask but should have. What is your daily "quitting point". This is individual for each one but for me, its when I know I am not in sync. Is that one bad trade, two, three. I don't know but I have a daily stop loss that when reached means I am done for the day no matter what. Again, this is personal so I won't tell you what mine is but suffice to say, its small enough to protect my account and so should yours.

Hope that helps.....feel free to stop by anytime. These are the questions I like to answer.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #307 (permalink)
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Wow... I just read this whole thread in one marathon session and I must say it was quite a ride. It reads exactly like my own story. You and I have a lot in common.

Some observations (based on what I have learned about myself):

You're a tinkerer. You enjoy the hunt for a good system as much or more than actually trading the system. Your system tweaking and exploration is probably satisfying a need of some sort. Figure out what that need is and then try to discover some other way to satisfy it. You're probably a problem solver by nature. The pursuit of the solution is it's own reward. There is no answer to the puzzle that is the markets.

In analyzing my own trades, I found the the best trades by far were the ones I placed and then walked away from the computer. Your greatest weakness seems to be in trade management, not in analysis. Place your stop and your target and then get up and walk away from the screen. You can't break your rules if you aren't sitting there living and dying by every tick of the market. If you can't walk away, then there is a problem. The ONLY thing that you have control over is your risk. Once you enter that trade, you have no control whatsoever over what will happen next. Micromanaging the trade is a sign of a refusal to accept that loss of control. Place the order then resign yourself to accepting the verdict the trading gods hand down.
Here is an exercise that you should try. Deliberately take several losing trades in a row. Consciously analyze how you feel during those trades. Capture that feeling... it is the feeling of being at peace in the midst of chaos. You've already resigned yourself to losing the money, so there is no pain. If you can stomach it, do it with real money too. The show will be well worth the price of admission. At a bare minimum, just try to lose 5 ticks on one trade in the mini Dow. I think you'll learn something valuable about trading and about yourself with this little exercise. I sure did.

There is a reason that you are breaking your rules. Nobody does anything that they don't want to do. There is a cost and a reward for every action we take. We weigh the cost against the reward and then make a choice. You need to discover the payoff for breaking your rules. It may be a fear of losing. It may be that sense of loss of control. Whatever it is, you are in pain while in the trade. The instant you close that trade, the pain stops. Subconsciously, you have decided that the reward of making the pain stop is worth the cost of breaking your rules, which is losing money. Tying back into what I said earlier, it may be as simple as the discomfort of not being in control. Find another way to make the pain stop. I gave you one idea in the previous paragraph.

I think you're right at the edge of a significant turning point in your trading career, but you still have a lot to learn about yourself. Dig deeper, the answers are within you. And never ever ever ever give up. (But something tells me that last bit won't be a problem for you).

I have a note pasted to the bulletin board in front of my computer:
"Trading is about being okay with ambiguity. It's about tolerating confusion. It's about sitting with discomfort and being at peace with it."

 
  #308 (permalink)
Student Of The Markets
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Slipknot511 View Post
Wow... I just read this whole thread in one marathon session and I must say it was quite a ride. It reads exactly like my own story. You and I have a lot in common.

Some observations (based on what I have learned about myself):

You're a tinkerer. You enjoy the hunt for a good system as much or more than actually trading the system. Your system tweaking and exploration is probably satisfying a need of some sort. Figure out what that need is and then try to discover some other way to satisfy it. You're probably a problem solver by nature. The pursuit of the solution is it's own reward. There is no answer to the puzzle that is the markets.

In analyzing my own trades, I found the the best trades by far were the ones I placed and then walked away from the computer. Your greatest weakness seems to be in trade management, not in analysis. Place your stop and your target and then get up and walk away from the screen. You can't break your rules if you aren't sitting there living and dying by every tick of the market. If you can't walk away, then there is a problem. The ONLY thing that you have control over is your risk. Once you enter that trade, you have no control whatsoever over what will happen next. Micromanaging the trade is a sign of a refusal to accept that loss of control. Place the order then resign yourself to accepting the verdict the trading gods hand down.
Here is an exercise that you should try. Deliberately take several losing trades in a row. Consciously analyze how you feel during those trades. Capture that feeling... it is the feeling of being at peace in the midst of chaos. You've already resigned yourself to losing the money, so there is no pain. If you can stomach it, do it with real money too. The show will be well worth the price of admission. At a bare minimum, just try to lose 5 ticks on one trade in the mini Dow. I think you'll learn something valuable about trading and about yourself with this little exercise. I sure did.

There is a reason that you are breaking your rules. Nobody does anything that they don't want to do. There is a cost and a reward for every action we take. We weigh the cost against the reward and then make a choice. You need to discover the payoff for breaking your rules. It may be a fear of losing. It may be that sense of loss of control. Whatever it is, you are in pain while in the trade. The instant you close that trade, the pain stops. Subconsciously, you have decided that the reward of making the pain stop is worth the cost of breaking your rules, which is losing money. Tying back into what I said earlier, it may be as simple as the discomfort of not being in control. Find another way to make the pain stop. I gave you one idea in the previous paragraph.

I think you're right at the edge of a significant turning point in your trading career, but you still have a lot to learn about yourself. Dig deeper, the answers are within you. And never ever ever ever give up. (But something tells me that last bit won't be a problem for you).

I have a note pasted to the bulletin board in front of my computer:
"Trading is about being okay with ambiguity. It's about tolerating confusion. It's about sitting with discomfort and being at peace with it."


Slipnot511,

This was well said. In fact I have done this on several occasions where once I placed my trade I got up and walked away, especially in the middle of the day when PA is very slow, but knew it was a high O&P trade. I have no patience to sit in a long trade. The longer I sit in a trade the more I dislike it and talk myself out of it and will take a tick or two lose just to get out of the trade. I have my Dom set for auto trail so I don't have to manage the trade. However, the downside of all this is there are clues that the trade is not going to work way before your max SL is hit and you can't save yourself the extra ticks you will lose. And then I have had trades where the mkt came within one tick to stopping me out and then reversed and was a profitable trade.But your point is well taken and to me is sound advise. I have taken most of last week and this week off from trading and just watched the market's PA and patterns. This was one of the better things I have done for myself. When you're not trading and just watching the market it helps you see things you may not have had I been taking trades. I am at a point in my trading where I need to work on ONLY ME!!!! and I believe AZ should too.

Cheers
itrade2win

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  #309 (permalink)
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Wasted day...kinda

I was exhausted this morning. My daughter had a meltdown last night, I spent almost two hours on the phone with one of my best friends that has terrible cancer, and the wife and I had a "discussion" last night. Emotionally, I was spent and I did not sleep well at all.

So I decided to just watch and IF I saw a good set up, I MIGHT take it. I saw one, decided I was too tired and just closed it out. I think I made 1 pip.

Addittionally, the slow pace of TF right now is really hard for me to take. I missed all the early long signals today because I was sleepy so I don't feel to bad about it but the later stuff just wore me out. I guess the positive take away is I managed to sit through the chop without taking a single trade. The down side is the short I was stalking after I managed to wake up enough to really pay attention happened while I was passing the time away trying not to be bored.

So a wasted day perhaps but perhaps not. I kept my money in the account while I was too sleepy to trade and waited patiently for the signal to set up and just missed it due to not paying attention. I suppose I really could blame the market for being so damn slow but that is not taking responsibility for my actions. So in reality, it is my fault for being distracted at an important time.

I feel like I am in school all the time. I learn something new everyday.

Cheers.....

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
 
  #310 (permalink)
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Slipknot511 View Post
Wow... I just read this whole thread in one marathon session and I must say it was quite a ride.

You have more stamina than I do! I can't believe you read it all in one session. Thanks for taking time to comment.

Cheers...........

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris

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