After almost two years of trading, it's time for me to start a journal, and start trading in a structured way. This is as much as a lifestyle change as anything, and I am coming from a place of pretty severe damage. Some history, for context: In October of 2010 , I was first exposed -- really exposed, to the futures markets. I did the usual thing:
Freaked out at how easy and simple the E-mini ES futures trading seemed.
Bought and read about 20 books about futures trading.
Subscribed to forums, chat rooms, etc.
Opened a TradeStation account for $5,000, and traded virtually for a few weeks, while educating myself.
Started trading a combination of virtual and real money, sort of dipping my toes in the water.
Pretended that my gains were skill and my losses bad luck (when in fact my gains were luck and my losses were lack of skill).
Downloaded dozens of indicators. Tried them all.
Did this for about a year and a half, part-time.
Despite lackluster performance, and severe psychological trading issues, such as trimming profits and allowing scary losses (by moving stops based on hope) , felt that the occasional wins were enough, and deemed myself "Ready!"
Scraped up $50,000, took a hiatus from work, and spent the next six months ... slowly losing it all. And actually more. I think the entire one-year adventure was about $65,000.
I know, I know -- how stupid, right? But probably not so uncommon. Many seem to refer to this as "trading tuition." So in January, with all of that behind me, I started trading again with a smaller account, mostly virtual, but some live trades, and have had some modest success, and no devastating losses. I still suffer from limiting my profits, but my losses are carefully controlled. And I also find that I am much more patient, and spend more time watching than trading, when it used to be the other way around.
I am also changing the instrument. Despite the fact that that the ES is probably the most competitive futures market, I was determined that I could win in that market -- after all, I'm a genius, right? Well, not so much. So now I'm trading the EC futures contract at 4:00 AM to around 8:00 AM Pacific Time. This "experiment", and this journal, is proof of concept. I am determined that I can do this, and with discipline and patience. I am giving myself three months of daily 4-hour trading, and at the end the proof will be in the profit/loss statement . But the main thing is that I hope to have at the end of these three months, the following:
A disciplined money management plan.
A set of basic entries and exits using just a few criteria.
A set of habits that help to limit my losses and maximize my gains.
The personal discipline to repeat any success, and recognize failure in an honest way.
I want to keep this real, so I set the virtual trading account to $12,000, which is about all I could expect to raise at the moment without breaking the IRA. I am trading two contracts of the EC in TradeStation (E6, I think, everywhere else). My trades will be OCO, usually 2 limit and 1 stop of $250 (20 points, or pips, or whatever).
Today, I started at 4:14 AM PDT and at 5:45 I'm probably done with a $293.50 gain. I have traded four times - that is, I was always in with 2 contracts, and then sold one at a time. There is an image below that shows the trades, as well as a chart of the trades, and also one of the morning with some indicators on it.
Trade 1 - I looked at a longer-term chart and saw a general downtrend, and it seemed as though I could fade the move that went up to around 1.2945. I was in at around 42 short for 2. The market moved in my favor, but I had set 10 and 20 point limits, and so not even the first one was hit. I sold the first contract at a 4-point gain, the second at a 5-point gain. You can see similar patterns of behavior in the subsequent trades.