Hi readers, this is the start of my trading journal.
I'm doing this to help me become a better trader and to win over my weaknesses.
I'll share my trading setups, hoping they will be useful for someone else.
A little bit about me:
born in 1972
university degree in statistics
started working as a software developer in 1997
started trading the stock market in 1998, during the internet IPOs period
started my market research small business in 2001
started day trading futures in 2003
spent all my money to buy a house in Rome in 2005
then traded forex spot with penny money
now I can afford to trade futures again
My goals are:
identify my trading weaknesses with the help of this journal
share and discuss my setups
become a profitable part time trader
close my business and become a full time trader
Then I'll be free, without customers to please, without strict working hours and holidays and the rest.
I hope I'll be a better person too, with some time to help others in other fields than trading.
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As I said before, after spending all the money to buy a house, now I can afford to trade futures again.
I'm trading an account at Velocity in my spare time, without much organization and planning, just to get my hands back on futures.
I've been trading forex spot during the last three years, using very little money, just to improve my setups and to keep me trading something. I managed to do an average monthly gain between 5% and 10% during the last three years, this was my target.
I believe to have an edge as a discretionary trader. I have a few setups developed during many years of trading.
My main weakness is lack of discipline, meaning that I often take trades without a clear setup, because I'm bored or for other reasons.
I'll trade only real money, no demo account.
In the next posts I'll put together my trading plan and then I'll following it day in and day out, at first on a part time basis, then, when I'll feel confident enough and the numbers will support this, I'll become a full time trader.
I know I will do it. I've got no doubt about it. I'm young and strong and I'm going where I belong ;-)
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Let's start by talking about my setups. But first a clarification: I believe setups are not the most important thing in trading, mental skills and toughness are.
By mental skills I mean being able to read my state of mind in realtime, and being able to change it to quickly get in the zone as needed, to reset after every trade, to shield my mind from negative and/or excessive thinking. Thinking too much is an easy mistake to make when trading, the boundaries of thinking should be clearly defined prior to start trading... a bla-bla-bla in my mind is a sign of weakness, and I must be tough, cause I'm here to take other people's money.
Two excellent books on mental skills are:
Trading in the zone, by Mark Douglas
The new Psycho-Cybernetics, by Maxwell Maltz and Dan S. Kennedy
The attached chart is my main trading template, with explanations on it.
I also use other templates when trading, but they don't need explanation:
A slingshot is a retracement after a trend is first established. Price should bounce at the VMA and resume the trend.
When the trend is strong, price will bounce almost exactly at the VMA and resume the trend, see chart 1. The BLINE (Stoch 35,10,1) should be over the 80/20 level (or very near) and the faster Stochs and/or the %R should go briefly in the opposite direction and come back up (or down).
When the trend is weak, the price will break the VMA in the retracement and bouncing from the WMA, EMA or another level of S/R. The setup is confirmed when the VMA is penetraded again in the opposite direction, see chart 2. In this case the BLINE should be above 50 (for uptrends) and the faster Stochs should reach the 20 level (for uptrend) and reverse quickly.
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MOF stands for Money On Floor, it represents the first pullback that could start a new trend.
It is rare and difficult to spot, but it is usually very rewarding because it catches the start of a new trend.
For a long MOF, the current trend should fail by making a higher low (in a downtrend) instead of a lower low. Then price should go up and cross the VMA, starting a new trend, see attached charts.
The BLINE should change direction and go up fast, while the faster Stochs should make a brief pullback and turn up.
The opposite is true for a short MOF.
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Since a good MOF is rare, but new trends start often, one method to trade the possible start of a new trend (up) is to simply buy the first pullback on the VMA or the WMA after price has crossed the VMA from the downside.