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Zen & the Art of The Small Account


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Zen & the Art of The Small Account

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  #621 (permalink)
 bluemele 
Honolulu, Hawaii
 
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aztrader9 View Post
I had a ton of distractions this morning...Result....I was down $580 at one point.....then I had to run some personal errands and when I got back, the distractions were gone and I could focus.....I dug out of the hole, got to +$580 and after a bit of impatience, gave back about half and ended the day +$260.

For the kind of day I had, this result is OK but not optimum.

I am having a tough time breaking through the 30 tick barrier for some reason. I have broken it a couple of times this week but prior to this week, 30 ticks is where I seem to break down and start giving back.

So for the next couple of weeks I am going to risk 20 ticks per contract to make 30 ticks per contract. If I can do this 4 out of 5 days a week, then I'll try for more but for now, I think I need to establish a walk away point for both stops (which I already have but its more than 20 ticks) and also for profit.

On a personal level, some really awful things happened over the weekend that really threw me for a loop. You know those things that blindside you from nowhere? Well I had one on Saturday. I had a really visceral reaction to something someone said. It took the weekend to really process and today I was able to make it right. Or at least begin the process. It was easier than I thought.

Also this week, my trading journey is 2 years old. In many respects it is a journey filled with regrets and missed opportunity. Its also a journey of self discovery and in some ways, self improvement. The improvement process has been unexpected. I expected to become a good trader. But becoming a better person, that I did not expect. In truth, I have fought that process quite a bit. I want to hold on to some of my bad habits. They have served me well in the past but in trading they are death. One of my habits is to try to bend people and circumstances to my will. That really works out well in trading! NOT. Learning to let go, to give people the space and grace to be themselves, to speak freely, to just be, without me driving them with my agenda is becoming liberating.

Two years into this journey, I am more at peace with myself than I ever thought possible. There are aspects of my trading that have bled over into my spiritual journey as well. This has been really unexpected. To be where I am and actually be comfortable with it. Happy, no but content, yes. What does this mean? To me it simply means that I am at my best when I am not depending on my own strength and simply trusting in my God. The knowledge that He has my best at heart is enough. Even though I may not recognize or experience it as such, it is still enough.

Anyway, this week marks the end of my sophomore year in trading. I am looking forward to the next couple of years.

I think you will find yourself slowly gravitate towards 'scalping' for ticks to 'scalping' for points. At least that is what I have watched others do as they have elevated. Excited to see your journey progress.

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  #622 (permalink)
 PandaWarrior 
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tderrick View Post
Hey, AZ... hope all is well

I have a question about stops... If you have a 10 or 15 tick winner going and price comes back at you, do
you bail for a small profit, or let it get into the red towards your stop or even take out your stop. I have some
pretty large stops going these days. And it's tough to have 15 tick winner turn into a 15 tick loser.

I have the biggest problem with this....

Well this is a philosophical question at its core. I think one must first ask oneself the following questions and the answers will form the core of ones trading system and therefore the number of ticks one is targeting.

Question 1. What is the purpose of my trading? Two possible answers in my book. Answer 1. Daily income. I wish to replace/supplement my current income. Answer 2. I do not wish for daily income and instead, I desire to increase my wealth through trading.

Depending on the answer to this question determines what you should do in terms of targets and holding through a pull back.

Answer1. Daily income. If this is the answer, then one should define how much daily income or perhaps weekly income is needed, then design a system that allows one to achieve this in the fewest possible trades per day. In my view, this would lead toward a short term scalping system. In other words, fewer ticks and bigger size. In this scenario, I would hesitate to hold through ANY pull backs but instead focus on capturing a predefined number of ticks per trade and looking for set ups that allow this. It may require 1-5 trades to accomplish but if daily income is the goal, then shorter time frames and smaller targets seem to be the appropriate response and in regards to your question above, I would opt for scalps in the 5-20 tick range depending on the time frame/range bar setting one uses. In my view, a 5 minute/15 min combination is the maximum one should use for this type of trading. It could be many many minutes between set ups and if you miss one it could be a couple hours before the next one comes along depending on the instrument. So to answer the question from this perspective, I would never allow a 15 tick winner to become a BE trade. This trade would have to have had 20 tick target and at around 15 ticks I would be BE+10.

Answer 2. Wealth building. If this is the answer, then longer time frames with both larger targets and larger stops are appropriate. If day trading using this approach, I suspect one would be engaged in what I call intra day swing trading. In other words, one is trying to capture the majority of the daily movement in one or two trades. This would call for some really good price action reading, excellent support and resistance identification and flawless execution. Since there are so few trades each day, one is banking on a very good R:R. I have heard traders say they like at least a 3:1 but many really like a 5:1 or greater R:R. This means for your 20+ stop, you are looking for at least 60 ticks and hopefully 100 or more ticks per trade opportunity. Does this mean you will get that many each trade? Of course not, but you are setting yourself up for longer and therefore more profitable trades. This means trading at or near major levels and holding to other major levels. The in between levels should not matter. One should also be prepared for exactly what you described, a winner that looks like it may become a loser.

So then, one must decide if one has what it takes to be a trend trader, wait patiently perhaps all day for that one trade that looks like it will produce the R:R you want, have the internal fortitude to enter and then simply wait for it to pay off.

For me, I understand HOW to trend trade for the larger moves, I often call them at key turning points. BUT I have not developed the skill and patience to sit through the ups and downs of those moves. As I progress in my trading, I hope to do just that, take fewer but more profitable trades. For now, I have accepted my lot in life. I am an intra day scalper. I do however believe in trading in the direction of the trend every one else is trying to ride to its conclusion. Instead, I am currently attempting to scalp out a few trades along the way as the trend progresses.

There is a saying that many successful traders say. "Every trade starts as a scalp". By this I infer they scale out of a position and trail your stop. Mathematically, this is the most ridiculous thing you can do and people smarter than I have proven it. That being said, from a mental standpoint, if one scalps their first position and then allows the second and or third position to progress a little further, then the trade becomes less stressful. Even though I believe in the AIAO approach, the scale out method makes tons of sense from a mental well being stand point.

So the long answer is as written above. The short answer is this: If you cant stand the pull backs, scalp. If you can stand them, be an intra day swing trader and shoot for the big kill. Just don't fight it. The internal conflict will hamper your trading until you accept and release yourself to just be a scalper or swing trader. I would suggest no live money until you settle this internal dispute.

Hope that helps.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #623 (permalink)
 PandaWarrior 
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bluemele View Post
I think you will find yourself slowly gravitate towards 'scalping' for ticks to 'scalping' for points. At least that is what I have watched others do as they have elevated. Excited to see your journey progress.

I agree with this. In fact, I have accepted it as part of the journey. I have a pretty good handle on the scalping for points thing already. I know how to do it. There are many days in which I identify an excellent turning point in the price action and am able to make an educated or some would say, lucky guess about the next important level to be in play in terms of targets. Often times, these areas are many many ticks away. I guess its hard to embrace the fact that after price has risen for say 150 ticks in CL, that it could retrace 75-100 ticks before resuming its upward journey. The other day when CL was on a $4 tear, the pull back at the end of the day was 100 ticks but that represented only a 25% pull back on the days price action. Simply incredible. And hard to accept at times.

And so I am a scalper for now. But cognizant of the fact that I will progress toward larger and larger targets. In fact, since I started using MTFA, my grasp of the larger picture has increased quite a bit. The price action on the larger time frame is MUCH easier to read. There is much less noise. And on the day I can accept a 20 tick stop on 5 lots, I will move to that time frame and trade that in the context of an even larger time frame. But for now, an 8-10 stop is enough.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #624 (permalink)
 tderrick 
Nashville, Tennessee
 
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Thanks for the stops help, brother... you know it is always greatly appreciated. I feel I am at the
brink of making some good money at this game. As you say I just need to find my angle. Live money
is indeed on hold as a prepare for my Sophomore year. I need to finalize a system I will use for the next year.

When you have a minute, would you give me a typical strategy of scaling out two cars?

Shooting for some of the trend may be better for me, for as you know, my temperment is not the best.

I could earn a living with 2 cars and 20 ticks a day... Should be easy enough if I could just control my emotions.


...your the best...


AJ
Nashville, Tennessee


"Life On The Edge of SR"
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  #625 (permalink)
 PandaWarrior 
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tderrick View Post
Thanks for the stops help, brother... you know it is always greatly appreciated. I feel I am at the
brink of making some good money at this game. As you say I just need to find my angle. Live money
is indeed on hold as a prepare for my Sophomore year. I need to finalize a system I will use for the next year.

When you have a minute, would you give me a typical strategy of scaling out two cars?

Shooting for some of the trend may be better for me, for as you know, my temperment is not the best.

I could earn a living with 2 cars and 20 ticks a day... Should be easy enough if I could just control my emotions.


...your the best...

If all you want is two cars and 20 ticks, then being a big trend trader is not what you need. You need a rock solid way to get either 20 ticks in one trade or 20 ticks in two trades. No need for scaling out. If you are trading CL or 6E or something that moves, one or two trades is enough most of the time. If you want one trade that takes a small profit on the first position and then you let the other one run in an attempt to capture a big move and perhaps make cover your weekly nut in one trade with one lot, then I think you could be in for a rough road. Unless you pick the turning point pretty well, you will have a lot of stop outs on the second position.

But here is a a series of videos to help you do build the strats in NT7. NinjaTrader Version 7

If you are looking for what I would do in your circumstances, I think my strategy would be to trade with the larger time frame trend and look for two trades of 10 ticks each using a strategy designed to capture the smaller swings within the larger time frame trend. I would forget about scaling in or out.

Not sure if this is what you were looking for but its my two cents.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #626 (permalink)
 tderrick 
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As always, AZ, I will take your advice to heart.


AJ
Nashville, Tennessee


"Life On The Edge of SR"
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  #627 (permalink)
 PandaWarrior 
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Haven't really posted in a few days. First of all, my entire family has been sick. My kid got over it pretty quick but my wife totally relapsed. That left me to trade, take care of the kid and the wife all at the same time. Basically its not really possible to do all three well, so I opted for the family and just traded hit and miss. Mostly miss. While I ended the week slightly positive, I had more loser days than winners. I just happened to have a real break out day one day that saved my bacon but in the end, it was a terrible trading week.

I had time to think about things quite a bit as you might imagine and I've come to this conclusion:

I trade to much. To many trades. I know I talked about 30 ticks and out and I will do this beginning Monday but after reviewing the trades today for the past week, I just traded to much. I fear it could become an addiction and that is the last thing I want. I want to trade to live, not live to trade. I have spoke and written these words before but today I really mean them.

So going forward, I'll be looking for the HPO on my MTFA method, taking my money when I have it and walking away for the remainder of the day. I will no longer spend all day in the front of the computer. I am tired of it and life is to short to spend watching squiggly lines ALL day.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #628 (permalink)
 papa15 
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aztrader9 View Post
Haven't really posted in a few days. First of all, my entire family has been sick. My kid got over it pretty quick but my wife totally relapsed. That left me to trade, take care of the kid and the wife all at the same time. Basically its not really possible to do all three well, so I opted for the family and just traded hit and miss. Mostly miss. While I ended the week slightly positive, I had more loser days than winners. I just happened to have a real break out day one day that saved my bacon but in the end, it was a terrible trading week.

I had time to think about things quite a bit as you might imagine and I've come to this conclusion:

I trade to much. To many trades. I know I talked about 30 ticks and out and I will do this beginning Monday but after reviewing the trades today for the past week, I just traded to much. I fear it could become an addiction and that is the last thing I want. I want to trade to live, not live to trade. I have spoke and written these words before but today I really mean them.

So going forward, I'll be looking for the HPO on my MTFA method, taking my money when I have it and walking away for the remainder of the day. I will no longer spend all day in the front of the computer. I am tired of it and life is to short to spend watching squiggly lines ALL day.

I agree with you whole heartedly. Keep things in their proper and rightful place.
Papa15

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  #629 (permalink)
 soumi71 
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Good thinking and I totally agree with you 100% ,
looking forward to the rest of your journey

"Risk more than others think safe.
Dream more than others think practical.
Expect more than others think possible.
Care more than others think wise"
 
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  #630 (permalink)
 tderrick 
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Exactly the the road I am on, brother...

Find that good trend and reach my target in one trade.
And if the pullbacks are too hard to bear, no more
than 3 trades.

When I reach the 5-10 trade area I feel I am not planning enough and just plain scalping- which is
too hard on my Psyche.

Good luck to us both...


AJ
Nashville, Tennessee


"Life On The Edge of SR"
Follow me on Twitter Visit my futures io Trade Journal

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