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Break Even Trader
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Break Even Trader

  #1 (permalink)
Elite Member
Cincinnati Ohio
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Futures Broker
Favorite Futures: AUD
 
Silver Dragon's Avatar
 
Posts: 1,597 since Feb 2011
Thanks: 3,860 given, 3,318 received

Break Even Trader

I have decided to start a journal to chronicle my adventures in trading. A little bit about myself:

I have been trading off and on for about 13 years. Traded a little bit of everything over the years. Forex, stocks, options, futures. Forex is my current poison of choice. In my day job, I am a Six Sigma Blackbelt and manage a call center. I am a data geek, who likes to build databases. I also enjoy building custom computers.

The story of the Break Even Trader:

I started out learning about trading in 95. I started trading real money in 98. In June of 99 I took a year off work to day trade. I managed to turn 2,000 into 15,000 in 6 months. At that point I thought I was going to be rich!! Not! You have no idea how easy it was to make money at the height of the bubble. In March of 2000 I started giving all the money I made back to the markets. By August I was back to where I started. I gave up day trading and got a job to pay the bills.

Looking back at the few journal entries I made during that first year all I was concerned about was making money!! I had calculation after calculations of how much money I would have to make over the next 5 years to make a million bucks.

After the collapse of the market all of the brokers were starting putting restrictions on stocks. The high flying stocks started requiring a lot more margin, in some cases you had to have cash to cover the purchase. With 2100 in my account it was impossible to make any money, or so I thought, if I could only buy 50 shares of a stock. I was used to buying a 100 minimum. Near my peak of my account I was buying 500 to 1000 share lots. So, having to buy 50 was beneath me. Yes, I was arrogant when I was younger! After all the world owed me something.

Next I went on to options. Took 6 months to learn what I needed to know, and went at it. Again, I doubled my money in a year. I attribute this to being extremely lucky. There was very little skill involved in my stock picking ability. Once again I became arrogant and started to buy more and more contracts. With that said, in April of 2003 I was holding 10 contracts for two different stocks before earnings (what was I thinking!!) and they proceeded to tank on bad news. I went from 4000, down to 1800 in one day. The other contracts I was holding made a little money and was back over 2000 bucks again.

I walked away from trading for a year. Came back in 2004 and started trading stocks. I was starting to learn, but trading was still more of a hobby to me. I took smaller lots, 20 to 50 shares. But I didnít have a system. No plan, nothing on paper. I traded stocks that looked good. I managed to make and lose 500 bucks several times over the next year.

In 2005 my son was born. I gave up trading to focus on him.

By 2007 I had more time on my hands. Thatís when I found futures. I thought this is it! You can make 50 bucks on a one point move on the S&P mini's. (50 bucks a day x 250 trading days = Rich!) Only problem was I did not have enough margin to trade at night. So I started trading corn futures at night instead. By this time I really needed to learn more. I started learning more about trend lines, support and resistance etc. Still did not know enough make any money. I was still breaking even.

Somewhere along the line after I had been trading futures for while and lining my broker with commissions, I realized that you need more than a plan; you need a detailed plan on paper! So, I started devouring every trading book I could get my hands on. Started keeping a record of what worked and what didnít. Its amazing how much better you learn when you write stuff down!!! (beginners: please read the last two sentence again. It will save you alot of time and money!!) I spent hours watching the market. Looking at the price action. Watching trades go through. Suddenly things started to click. Looking back, I think it was my son being born which caused me to change my approach. Children have a profound affect on how you think and view the world.

By this point we are in the middle of the financial crises. During this time two very important things happened during a three month period that changed my life:

First: A friend of mine who is a brilliant database designer was showing me a app he made for his Blackberry. He started telling me about how he could market this app and make a ton of money. I asked him, donít you like your job anymore? He said "Well, yeah, but you gotta have a plan B. I sure the hell donít want to be doing this for the rest of my life." I walked away from that conversation and asked myself "What is my plan B?" Answer: Trading!

Second: I was still looking for the right vehicle to trade. Thatís when I discovered Forex. Within a couple of weeks I knew this was for me. I think the clincher was the fact it traded 24 hours with decent volume at night. This gave me a chance to trade and study price action.

Now I had a vision. Now I had a goal. Now I had a reason to get it right!
First thing I did was to give up trying to find the holy grail and instead focus on what works. Second was to devote my time to learning as much as I could and develop a trading plan.


Next topic: defining my goals



nosce te ipsum

You make your own opportunities in life.
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  #2 (permalink)
Quick Summary
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  #3 (permalink)
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Hi Silver Dragon,

That was an excellent intro. I'm looking forward to the next exciting chapter.

Everybody on futures.io (formerly BMT) has a really good story and reason for being here.

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  #4 (permalink)
Elite Member
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Futures Experience: Intermediate
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Posts: 1,597 since Feb 2011
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Goals and Trading Time and Other Thoughts

I have pretty ambitious goals; This is what I have written down:



1. Continue to learn to manually trade.
  • This is on going and the most important of all my goals.
  • Create a set rules around my trading and continue to develop the dicipline to follow the rules.
2. Create a profitable automated system.
  • Completed on 2/3/2011
3. Create a sustainable profitable automated system.
  • This is 5 year test. I will use the above system to learn how the markets affect a set strategy. The goal it learn how to adjust the system based on market conditions and keep the system profitable over long period of time. There is a good chance the system will fail and that is ok. I am looking to learn to make a better system.
4. Create a high frequency trading system.
  • This is my BHAG. (Big Hairy Audacious Goal!) I will explain this in a later post.
It would appear from my goals that I am focusing heavily on the automated side. It's actually about a 60 40 split. The manual trading being part of the 60%. I spend my weekends (when I have time) and the time in between trades when I am waiting for the next set up working on the automated side. The rest of my time is spent entering the trade and watching the price action and how it affects the indicators I use.

One of the big themes on BM's site is to "Know Thyself". For me that means I have to accept the fact my mind never stops thinking of ways to make things better. I love to fix things! The second part of that equation is knowing when to stop fixing. This was a hard lesson learned. With that said, I always need more than one thing to do else I would be bored out of my mind!! My BHAG listed above is a long term project which will keep my mind on the bleeding edge of trading technology while at the same time create a continuous learning environment; Translation: I am happy! Happiness is by far the most important thing to have when working. I would say it is more important than money. My dad always said: Find a job you love to do and you will never have to work another day in your life!

.
Trading time.
Since I have a full time job and a family my manual trading time is restricted: It is currently at night between 9:30 pm and midnight most nights and sometimes between 6 and 7 am. I dont sleep much!

.
Other Thoughts
I dont know about everyone else but occasionally I have to walk away for a few days. Shut down my trading software and disconnect from the trading world. I find I can not see the forest for the trees. This is where I am at now. I have not traded or looked at code since Monday. When I come back I generally do some of my best work.... The hard part is know when to walk away.

SD

nosce te ipsum

You make your own opportunities in life.
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Alan View Post
Hi Silver Dragon,

That was an excellent intro. I'm looking forward to the next exciting chapter.

Everybody on futures.io (formerly BMT) has a really good story and reason for being here.


Thanks! I am looking forward to learning and contributing to the community.

nosce te ipsum

You make your own opportunities in life.
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  #6 (permalink)
Elite Member
Cincinnati Ohio
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Futures Broker
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Posts: 1,597 since Feb 2011
Thanks: 3,860 given, 3,318 received

Trading set up

Before posting actual trades I wanted to provide some detail on what my current setup looks like. Below are the chart settings for FX Euro. This can also be used on the 6e. I have marked in () what the settings are. Also in () is where they came from. I think the Swing indicator came with NT7.


Attached is a pic of what the setup looks like.

Chart1

14 Range Chart

Indicators
  • TS SuperTrend (ATR, 14, 1.4, HMA, 14) (BM)
  • Pivots (Daily) (NT)
  • ECO2 (12,9,29) (BM)
  • CCI Histogram V002 (20) (BM)
  • 89 SMA (color Red)
  • FibinacciClusterV14D (85,10,100) (NT)
  • Swing (5) (?)
  • PriceLine (NT)
Chart2
5 Range Chart


Indicators
  • TS SuperTrend (ATR, 14, 1.4, HMA, 14)
  • Pivots (Daily)
  • ECO2 (12,9,29)
  • CCI Histogram V002 (20)
  • 89 SMA (color Red)
  • FibinacciClusterV14D (85,10,100)
  • Swing (3)
  • PriceLine
SD

nosce te ipsum

You make your own opportunities in life.
Attached Thumbnails
Break Even Trader-indicator-screenshot.png  
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Cincinnati Ohio
 
Futures Experience: Intermediate
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Broker/Data: Futures Broker
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Posts: 1,597 since Feb 2011
Thanks: 3,860 given, 3,318 received

Trading Style

Good evening! I am trying to figure out where to start with the trade setups I use... So for now I am going to wing it until I figure out the best way to present it all.

Trading Style:

In my view the key to trading success is to enter High Probability Setups. This means waiting for several indicators to fall in place and then placing a trade when everything lines up. When doing this there is a greater likelyhood that you are going to make money. On the flip side of that it may mean there may be fewer trades. It takes a certain amount of patience and discipline to follow this type of trading style, but in the end it can be highly rewarding.

SD

nosce te ipsum

You make your own opportunities in life.
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Elite Member
Cincinnati Ohio
 
Futures Experience: Intermediate
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Broker/Data: Futures Broker
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Posts: 1,597 since Feb 2011
Thanks: 3,860 given, 3,318 received

CCI Histogram 20 Period

I have decided to start out with the CCI Histogram indicator basics.
The CCI histogram is outstanding for telling you about the current move. The trick is knowing how to read it. 99% of my trades occur when the CCI is above +100 or below -100. I have found the crossing of the+100 and -100 in conjunction with a break of a pivot or support/resistance line is a high probability setup. These are the trades I like to take.

In the attached pic you can see where the break occurs. Its important to note this is only one piece of the trade confirmation. For this trade the break of the Swing low was the second signal. Third signal was the crossing lines of ECO2. The fourth signal was the crossing below zero of the ECO2 on the 14 range chart.

10 pips is the goal on most trades, however, for this trade I would have exited around 1.4190 to be inline with the S- 38.2, 01 Apr support level created by the Fibonacci cluster indicator. As it turns out it bounced at 1.4186. Depending on my entry it would have a net of 4 to 6 pips.

SD

nosce te ipsum

You make your own opportunities in life.
Attached Thumbnails
Break Even Trader-cci-histogram-basics.png  
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Elite Member
Cincinnati Ohio
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Futures Broker
Favorite Futures: AUD
 
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Posts: 1,597 since Feb 2011
Thanks: 3,860 given, 3,318 received

Automated Trade Profit / Loss

Todays profit from automated trading system: 48.22

FX EURUSD
Live Trading
48 pips
1 contract


Notes:
Closed out on close due to NT7 error. errr....

nosce te ipsum

You make your own opportunities in life.
Attached Thumbnails
Break Even Trader-automated-chart-04-06-11.png   Break Even Trader-profit-loss-4-6-11.png  
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Elite Member
Cincinnati Ohio
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Futures Broker
Favorite Futures: AUD
 
Silver Dragon's Avatar
 
Posts: 1,597 since Feb 2011
Thanks: 3,860 given, 3,318 received

Automated Trading update


As it turns out the NT error kicking me out my trade yesterday may have been a good thing. We shall see if I would have been stopped out later today.

For the record: the reason I did not re-enter the trade after NT kick me out is because I was emotional about what just happened. (ie pissed off!) Emotional trading destroys trading accounts.

SD

nosce te ipsum

You make your own opportunities in life.
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