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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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  #941 (permalink)
 PandaWarrior 
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this was a tough week emotionally and financially. I did not trade especially well. Almost all mistakes were mental errors. Mostly targets placed inappropriately. I got greedy with the targets. Instead of taking profit where I needed to, I extended my expectations and saw my profits evaporate almost 100% of the time. The result was pretty good entries although there were some crappy ones as well. But I failed on target placement.

I also learned quite a bit about value. Where is the best place to buy or sell? Hint, its not based on an indicator.

I've decided to not trade naked. I still need a loincloth and a butt flap, but instead of only relying on what they are saying, I will focus my attention on the value areas, take my trades there, and once the indicators line up with the trade, I may put another contract on. I may also put another contract on if I get price moving in my direction enough to create the price structure I am looking for to provide"confirmation" and if I get a pull back into the original value area, add another lot there. Max two lots for now. Three to follow if at some point I can swing it and keep my max account size risk in line.

I'll be phasing in trend lines into my trading. So very often I have seen those broken and then price reverse from that level. I have always wanted to see my trades go my way right away and move to my target. That is fine for tiny scalps. But for larger moves...really anything larger than 10-15 ticks and sometimes 20, price will not go there in a straight line. I need to be able to simply wait through the pull backs on the way to my intended target. It is tough no doubt. Especially with one lot, but it can be done and should be done.

Ok, time for the weekend. I am tired of trading and looking at charts.

Cheers.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #942 (permalink)
 Big Mike 
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aztrader9 View Post
Ok, time for the weekend. I am tired of trading and looking at charts.

Cheers.





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  #943 (permalink)
 PandaWarrior 
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Last week was tough for me. Did I mention that? Over the weekend I read Mark Douglas' Trading in the Zone again. The first time was terrible. I skipped over all the mental mumbo jumbo to get to the tactical part. But after all the mental errors over the last couple weeks, I decided to read it again.

Once again, I have to concur with my first assessment of the book. Its a terribly written book with many instances of the author repeating himself over and over. I was once again bored out of my mind. BUT.....I came away with this. Embrace uncertainty. Learn to love the unknowable. I must make money without knowing what will happen next and instead, just put my trade on with my edge and trust that over time, I will win. In my head, I already knew this, but in my heart, I wanted to be right all the time. I traded not to lose. A sure recipe for disaster.

On Sunday afternoon, I came within a breath of packing it in and never looking at a chart again. The mental part of the game had gotten to me. But I went outside, got some air, hashed it over with my wife who was the cooler head this time around and decided to trade like I don't care about the money. Just do my job and let the ticks accumulate how they may.

No post yesterday but I felt like posting today. Yesterday and today's net tick total is 100 split pretty evenly between yesterday and today. Nothing special but the nice part was that trading was easy yesterday and today. No pain, no fear, no greed. Just find a trade, take what the market gave me, and be happy.

I also decided to not worry about big winners or how many trades I did. Just trade. Small targets in narrow ranges, larger ones in big ranges. Simple. I'm also paying more attention to actual price action instead of the indicators on the chart and I think you will see that from my trades today. Some were PA trades while others were indicator based. Who cares how they happened right? Just that they worked.

My chart has one indicator that is price action related and that is my handy dandy MA indie. The rest are assists for levels and other information I find important.

Tomorrow, my chart may have even less indicators on it. Been experimenting with trend lines and am starting to find them really intriguing.

After the near mental breakdown I had this weekend, I've decided I can trade any system and change my charts every day if I wanted to. Its whats in your head and heart that count. Systems are a dime a dozen and almost all work to one degree or another. To be sure, staying with one system is the smart play but you get the point. To win the trading game, you must first win the mental game. There is no other way. There is no way you will win without making peace with the true risk nature of the game, with the fact that you will lose sometimes, and that you can NEVER know what will happen next. The sooner one embraces the uncertainty principal, the sooner the fear and greed based errors will slip away.

I had no losers today. Not because I traded so great, I left money on the table, but because I just did what the market was doing and I did it without fear or greed. And when that little inner voice said to stop, I did. I simply refused to consider another trade. I did watch the market after that but I also read email, fiddled around with an indicator I was interested in, skyped with my trading buddy, etc.....then went to take a nap.

Going forward, you may see all manner of indicators on my chart or none at all. Doesn't matter. What will matter is this: Did I come to the market ready and willing to accept what it had to offer that day? Did I execute the game plan to the best of my ability? Did I trade happy and free? If the answer is yes, then I traded well, if not, then it was a poor day.

I also made one other decision this weekend. I will never again engage in historical chart review other than to review that current day's trading to see if I could have traded that day better. No more curve fitting indicators to historical charts. No more counting trades to see how many of "x" set ups may have worked in the past. None. No more, ever again. Its wasted time, produces a coulda shoulda, woulda mentality and makes me think I would have done better than I actually did during that time frame. I will review historical charts on one condition. If I find something I want to learn about.....say a price pattern I don't currently trade and I want to see what it looks like in various market conditions, I may do that to embed the pattern in my brain. BUT to look at charts from a holy grail stand point is in the past for me. Only forward looking charts from here on out.

Cheers....

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #944 (permalink)
 bluemele 
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  #945 (permalink)
 kronie 
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AzTrader,

you're discovering why floor traders call this industry and specialization that we have chosen, a young man's game.

its the same as in the military,

those under 25 have this invisible blanket of protection, and each soldier has the mentality of, those bullets won't hit me, and if they do, I'll still have my super, duper, protecto pack to bounce back.

those over 30 start to have more reason than brawn, and those in their 40's and above choose caution over brashness.

Traders need that cold dispassionate distance from reality, just to engage in the risk and manage it, manage the trade and the environment, as it is presented to them and manage the equation.

Glad to know you picked yourself up, and got back in the game and achieved more than 2 days of success!

From time to time, we all have those mental crashes, its just what do we do after we get those blue screens, that matters.


 
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  #946 (permalink)
 Lornz 
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aztrader9 View Post
Embrace uncertainty.

The key to trading success. It seems you are making some real progress now, when one finally "understands" the markets, things look very different...

However, I strongly disagree with your statement that "Systems are a dime a dozen and almost all work to one degree or another". This is simply not true. It is true in a sense that a good trader good probably trade with any system; it is his discretion that is the key component. But if the systems were any good in a vacuum, they would simply be programmed and make someone a lot of money...

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  #947 (permalink)
 Zondor 
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ZTR had a copy of The Disciplined Trader, a very early Mark Douglas book. ZTR thought it was unreadable, but I liked it!

Embracing uncertainty is the key. To be able to do that with equanimity you need to have confidence that you have a system that gives you an edge.

If you have such a system and take the trades that are in TRUE CONFORMANCE to the conditons of your system, you can have the peace of mind to let the trades take their course.

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  #948 (permalink)
 PandaWarrior 
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Lornz View Post
The key to trading success. It seems you are making some real progress now, when one finally "understands" the markets, things look very different...

However, I strongly disagree with your statement that "Systems are a dime a dozen and almost all work to one degree or another". This is simply not true. It is true in a sense that a good trader good probably trade with any system; it is his discretion that is the key component. But if the systems were any good in a vacuum, they would simply be programmed and make someone a lot of money...

Actually I should have said, a good trader can make any of the dime a dozen systems work.....or be able to tell if its crap and find another one.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #949 (permalink)
 PandaWarrior 
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Is trading without expectations the Holy Grail? I don't know but going into today's session, I felt at peace with myself and with the market. As the session opened, I had conflicting ideas about what it might do for the day. Part of me was long and part was short. The chart said short, but I thought long. Eventually I made peace with my conflict and just traded what I thought I was seeing.

As it turned out, it was long and I got some of it. I also had some short trades as well. I ditched (permanently????) my three moving averages in favor of the Super Trend and trend lines. This worked out pretty well but I failed to execute on every trade I saw. After trading I took off the trend lines and discovered I may not have needed them at all today. Just follow the super trend. I guess that works some days and others not so much. No matter, I ended up with a nice profit of 29 ticks today. Less than I could have had but still a decent mornings work.

At this point, I could have two back to back stop outs and still have a profitable week. Not my goal of course but nice to know.

Now some of you will want to give me grief for not holding trades as long as the super trend said to. Please don't. I am using it for entry identification and nothing more. I have some targets in mind, sometimes I can hold to them and other times not. Just depends if I get impatient or not. I agree holding would be nice. I don't. So what. I get what I came for and thats all I care about.

I had PA reading errors today as well as a couple of execution errors. I took a trade that was clearly not in my trade plan but I thought I knew better. -17 ticks for that one. Good job. I made it back though.

The chart is a little tight today, I had to shrink it down to get all the trades on it.

Tomorrow, more of the same. Look for trades, execute best I can, be happy with what the market gives me. Gotta go pick up my kid from school now.

Cheers.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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 jinhar 
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aztrader9 View Post
Is trading without expectations the Holy Grail? I don't know but going into today's session, I felt at peace with myself and with the market. As the session opened, I had conflicting ideas about what it might do for the day. Part of me was long and part was short. The chart said short, but I thought long. Eventually I made peace with my conflict and just traded what I thought I was seeing.

As it turned out, it was long and I got some of it. I also had some short trades as well. I ditched (permanently????) my three moving averages in favor of the Super Trend and trend lines. This worked out pretty well but I failed to execute on every trade I saw. After trading I took off the trend lines and discovered I may not have needed them at all today. Just follow the super trend. I guess that works some days and others not so much. No matter, I ended up with a nice profit of 29 ticks today. Less than I could have had but still a decent mornings work.

At this point, I could have two back to back stop outs and still have a profitable week. Not my goal of course but nice to know.

Now some of you will want to give me grief for not holding trades as long as the super trend said to. Please don't. I am using it for entry identification and nothing more. I have some targets in mind, sometimes I can hold to them and other times not. Just depends if I get impatient or not. I agree holding would be nice. I don't. So what. I get what I came for and thats all I care about.

I had PA reading errors today as well as a couple of execution errors. I took a trade that was clearly not in my trade plan but I thought I knew better. -17 ticks for that one. Good job. I made it back though.

The chart is a little tight today, I had to shrink it down to get all the trades on it.

Tomorrow, more of the same. Look for trades, execute best I can, be happy with what the market gives me. Gotta go pick up my kid from school now.

Cheers.


You got that one right to the tick .. Execute best you can and manage the best you can and let the market do its job.. Dont force yourself to x number of ticks .. This with fix time limit and trading will be golden for you .. .. . This will help you in your trading on the longer term but most importantly it will help you much more mentally which works .. wonders.. . Excellent work Keep it up

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