''Emotional'' journal

As trading involving emotional control. it is a wise move to record the emotional side of trading and compare it with the result.

Trading 1 > Emotion 1 > Result 1 (red -ve , green +ve , yellow) ( not in term of USD)

A trader's job is to trade or holding the trade

Overtrade is the biggest Sin

Copy from:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=125197

Given the limited number of traders who ultimately experience profitability, few other fields have more published rules and guidelines than trading. After all there's no book titled Idiots Guide To Trial Defense. We've been inundated for decades with the old saws about cutting losses quickly and letting winners run. Still we see little improvement in the trading performance of most participants. Futures trading is truly a zero sum game. Each night the Clearing House pays out the same amount of money it collects. Toss in commissions, charts, research and the endeavor quickly reaches negative expectancy. Since I began trading on the CBOT floor in 1982 much has changed. Electronic access, FIFO and lower commissions have vastly leveled the playing field between professionals and the rest of us. While technological advancements have made trading short term more appealing than a generation ago, in my view retail traders should consider trading less. In fact rather than enhancing returns and cutting risk most short term strategies only accentuate the losses associated with futures trading. Allow me to share with you some cautionary aspects and a bit of advice that could help you clear some preliminary hurdles.

Commissions: One of the least talked about advantages of being an Exchange member is ultra low commissions. I'll let you in on a dirty secret. The most legendary floor traders would have been net losers if they'd been paying the same commission schedule as you. In the larger financial products it was very typical for a floor trader to trade 1000 contracts a day in hopes of making just $1000 a day in profits. Superstar traders like Tom Baldwin would trade 20,000 lots on a busy day. I'd wager that many of you who've suffered grave drawdowns in your futures account are gross positive! Think about the paradox. Profitable trading yet net losses.

If your trading style is of a scalping nature I have a couple of suggestions. If you're trading more than several hundred contracts a day then lease an exchange membership. I won't go into the details here but for larger traders a seat will reduce your commissions and exchange fees dramatically. If you choose to remain at the retail level then try trading on an exchange or product with lower fees. Eurex charges far less than it's American counterparts. If you must scalp in America then look at lower fee markets like Treasuries. Or if you want to scalp a non-fixed income product choose a market with a larger minimum tick size. Paying $4-5 a r/t to scalp markets with a $5 tick is nonsensical. Cutting transaction costs is one of your most viable edges.

Short Term Technical Trading: I'm going to be both emphatic and controversial. There's is no system based on short term indicators generating anything other than real time random performance. It's utterly naive to believe the next few ticks can be handicapped by a stale set of variable equations. Now I know some of you are thinking I'm out of touch. That's because you've just successfully back tested some esoteric system with divergences, crossovers and filters. You're sure this new optimized system is gold. Think again. First the obvious. The Goldman's, Morgan's and big bucks CTA's with their vast computing power and impeccable tick data have already tested every conceivable indicator under the sun. Even if you're onto something remotely consistent you'll be subject to all the problems of high frequency short term trading such as commission costs, unable price orders and slippage. Now here's the good news. There's many signals derived from longer term strategies that will produce quality short term trades. Which signal has a more reliable chance of generating quick follow through? A new 5 minute high or a new monthly high? As a technician doesn't it make better sense to monitor a wider array of markets and spot higher percentage opportunities then to “specialize” in a single market and take a series of weak signals derived from noise?

Trade The News: One of the pretexts of technical analysis is the theory that news is already reflected in price. Nonsense. Markets are organic. Market moving institutional participants are constantly reevaluating their positions based on evolving perceptions of fundamental information. Think of the market as a basketball game. We're watching a half court offense methodically passing the ball around the perimeter in search of a high percentage shot. Suddenly an athletic defender intercepts the pass and runs down the court uncontested for a slam dunk. That defender's name is News and he can spoil even the most conservative game plan. News often comes unannounced. News can be as unreported as a dry weekend in July when perceptive traders figure out there's a potential drought developing and then push futures to a limit up open. No matter how mechanical and detached your approach you'll be frequently confronted by decidingly anti-technical factors.


Position Sizing: It only matters how much you bet. We've all made historic market calls only to take a small profit much too soon and then watch the market explode for weeks on end in the direction we anticipated Then the next time we try to milk a winning trade for just a bit more and see our open profit evaporate into loss. It seems that picking the markets direction is seemingly easier than extracting consistent profits. I preach two approaches. For folks who're reasonably well off and seeking stable returns I suggest you vastly under trade. Practice with scaling out of winners along with hard protective stops. Larger accounts should risk no more than 1-2% of their equity on each trade.
For smaller accounts I advocate a more wide open strategy. You're probably not going to double your account 12 consecutive times trading for 1 tick at a time. None of us are that good. What you can do however is hit an occasional home run. I'm not saying just let it rip without an uncle point but you must intelligently look for opportunities that'll give you a quantum leap in return. Unless you're still a teenager, compounding $5000 by 20% a year isn't going to be a life changing experience.

Learn About Options: Like futures themselves, options are increasingly traded electronically and have enjoyed tremendous surges in volume and liquidity. For small traders the ability to over leverage with a defined stop loss on equity is a boon to your big play potential. I'll give you a pertinent example. This past December I had strong resistance on the March e-mini S&P at 1511. I decided I wanted to risk $10,000 on a short position. Index futures margins would have allowed me to short just 2 contracts. A 100pt down move would in turn have resulted in a $10,000 profit ($50 per point x 2 contracts). Instead I bought $10,000 worth of put spreads with an expected 8-1 payoff if futures closed below 1400 at January expiration. Fortunately the trade worked and my 10k turned into a minor windfall of $80,000.
Another advantage to long premium options trades is the ability to trade futures positions contrary to your options. If you're long calls you can then be a natural seller of futures. Often if you're in a rhythm you'll quickly pay the cost of your options with the proceeds from your delta hedging.

Accept Your Psychological Shortcomings:We're all flawed in one way or another. Discretionary traders in particular are subject to the pitfalls of poor trade selection, over trading, undefined risk and revenge trading. A movie actor can vacillate between bi-polar feelings of arrogance and guilt but what makes his foibles different than a traders is the simple fact that he gets paid no matter what self destructive urges overtake him. Trading is akin to playing 18 at Augusta each day. We will never trade perfectly but must attempt to at least minimize our innately ruinous impulses. Keep a journal of your trades. Don't just mimic the information contained in your brokerage statement. Instead keep a log of how and what you felt emotionally about each trade. Like me you'll find there's commonalities with many of your losses. For instance if I fail to take a signal that would've resulted in a big winner I'll invariably take a sub-optimal trade next. Often I'll over trade it to boot. Doing nothing more than eliminating your “trouble spots” will save you money that can be dedicated to the next good setup you perceive.

Hopefully I'll have an opportunity to expand on these points in subsequent articles. Till then, best of trading and good health to all.

Closer and closer

Sim Trading - made paper money even though market ranging yeyy!...

Closer to the light but I have no active trading right now. My son sitting an important exam :)

How to protect your trading mind

Once trade is entered, I would say wait for stop loss to be taken out OR IF YOU FEEL IT NOT GOOD, GO FLAT ASAP. I said this because trading is naturally risky and a losing business....If the trade proved to be good, then the trade now should be breakeven. Once the trade is profitable, bring the stop loss closer to make sure the profit is protected. Not only that, my TRADING MIND is protected from emotional worry. I can see and think clearly.

The Fibbemas and the gang

To repeat - What I need to trade succesfully:

Experience - such as yesterday - back to base is again showed in CL.

The lucky Fibbemas :he he :
5 , 9, 20, 50, 100 - Why I didnt follow the oldman's sequence you asked...Well, he didn't trade CL

Candle Pattern : Hammers, doji, engulfing, inside candle,  wedge, covering

Lots of  3 point lines

Long Range Lines

Volume

Y - High,Y- Low, Y-Close

Trading Styles: Breakout in 4mins, Pullback and Continue 1 min, Bothways Triangle, 50% retracement, Observing Candle patterns.

Donchian Channels to be considered

Target 200 daily

After reviewing my trading in this holy month, I have a conclusive tool and edge now.

So I can moved to the next level of trading. I need to determine my min profit traget as I found that keep longer trading hour is bad for me.

So here my trade management plan:

No. of trades per day : remained 2 times per day

Profit target: USD 200 per day. If I got more from first trade, it will be a bonus. If I got less 200 from 1st trade, I will try the second trade.

Risk per trade : -USD 100 per trade, exit as wish - not waiting for Mr Stoploss once I found that the trade is bad. So at most it shall be breakeven.

The long road to Succesful Trading

For a long time I have this Idea A that yet to be implemented due to lack of tool.

The I upgraded my Sierra Chart to the latest version.

Now I can put in the tool that I really want to use and discarded the usual ones.

Then yesterday I read this thread 

 http://www.sierrachart.com/supportboard/showthread.php?t=28537&highlight=support+resistance

Looked like that I have the same idea with Kiwi, a VERY senior trader and respected Indicators programmer.

Be like Water - continue

Revised some tools in my chart to suit the market, especially the MA as it is quite tricky.

I also separated the MA from main chart in order to have a clear mind :-)

Add up a timer, as I acted to soon before the candle close.

I have a good feeling about my current chart layout

Trading is truly is a mind game

I determined that there are at least 4 phases of CL, not as simple as 2 as I previously thought.

1) Straight trend - Breakout style

2) Waving trend - EMA style

3) Pulsing Trend - Price/Candle Pattern style

4) Ranging - Indicator style

The problem with my mind is that I need to clear my mind before I could see the phases. My mind want confirmation but the market is full of Uncertainty. Trading is truly is a mind game. To beat the market, I need to adapt to the market uncertainties, I need to be like Water

http://youtu.be/-DDGMSDfh_w

Still on sabbatical leave

Halfway through Ramadhan and I'm still on sabbatical leave.

This give me opportunity to re think strategies.

What I have now that I can predict only about 10% of CL behaviour.

The other 90% drive me nuts - the ranging period.

How you can plot your trading plan if the price is random ?

Traders said it's hard to predict the highest and the lowest.

I will focus how to determine that - the level of high and low and play pull back at SR

Again, CL went to the starting base before jumping down

The market scaled higher and higher to the peak
Then I looked at 1chart, I saw the hammer and doji
the 3chart showed normal candle but with MACD divergence
My 50chart show contraction of bolingger.

I put SIM short . Walla - Quick SIM win 490.

Learning a new trick

I learned fibonacci this week. It is simple in it application and whats more ..combined it with what I already know the it make some sense in my trading brain.
A definite good thing of fibs is that it helped me draw horizontal lines at one clik !

Volatile Markets but Gurus seemed missings

:-)

Faster, and Stocks are tanking

In US and malaysia the stocks are tanking.
And I'm grateful that I can trade CL future as a better alternative.

Again, I re looked my old charts and I decided to change the slow stochastic to faster stochastic.
No body told me that except my fast brain.

p/s....Coincidently, Richard advice is relevant
http://richardwesleytodd.blogspot.com/2011/08/hahahahaha.html

Master and slave charts

SIM -Previous weeks I'm simming mindlessly... I got -ve result, but yesterday i got positive results. Good improvement for my self and I felt comfortable.

This is the last set up that I will not changed any more as I have tested it mindlessly like a zombie.  For the record I had nearly 900 setups within 3 years trading part-time. I named it the NakedHammer ..He he he.

However I will try add up a range chart to have a micro look for the trend...but this micro chart is not a decision maker master chart, it is more like a slave chart

Traders Proverbs :)

Triangle and doji is like a compressed spring

So easy on SIMMING

For about a year I watch CL in 2 min frame.
They said don't changed your set up. Yeap I followed that advice. 1 year.
Yesterday I watch CL in 1 min frame.Totally focused. Interesting.
(5min and 15min charts as the GPS)
.
 Now I understand why 2 min frame is different compared to 1 min frame.


It's the time, Elliot Wade..

he he.

Again CL went to the base.


SIM trade - usd 650...more than 1 plays, of course. It is so easy when I'm SIMMING.
May be I need to train my mind that my live is Sim and my Sim is Live

Way To Go

SIM - This session the CL repeating its die-hard behaviour . It confirmed my CL theory.


Go to the base and jump : Jump up or jump down.

So my WTG

1) identify the base first - starting line, normally at the Pivots and SR
2) check the space of least resistance - direction
3) look for the pattern - the trigger - 2 types - the price pattern esp triangle , the candle esp hammer (pin bar), bigger candle and doji (spinning top)
4) My Stop Manager will deal with my losses , so I will concentrate only on the profits.
5) I may use stop order and market order where necessary
6) Special obs: Turnaround : After a long trend or long candle, usually followed by a hammer, a candle (various types) then price cross the line of dojis. Enter at the correct side of dojis lines.


Disclaimer : Foooollow at your own risk. You may have the knowledge but you dont have the xperience to deal with my set up.

A month of Hiatus

Ramadhan is a fasting month for muslim...at night Muslim have tarawikh prayers, which clashes with my trading hour. So my live trading will be limited.


However, this will give me opportunity to review my scalping technic, which during the last SIM session I got USD900.

Great Lesson Today

Started with a comment from a veteran trader in Elite Trader forum regarding  27th July 2011. An independent view of an expert witness (names withheld here)

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Wow! Unbelievable except this is CL so you never know. This morning it was under constant selling pressure. Someone was dumping it. And now someone is gobbling it up.

Trying Short @100.47. Not seeing any falloff.

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Registered: Sep 2002
Posts: 3056

07-27-11 02:41 AM
I should be posting my breaks like you do ( ) Was just talking to a lady friend of mine and totally missed that huge move. Missed them all today on breaks. I was telling my friend this. Oh, well. Keep your losses small and you'll do well. And days you miss some action are no problem. There's always the next one.
=========
P.S. I'd call today's action very unusual. Rallies and sell offs seemingly on their own.

ADD: FWIW when I don't feel like I have a good sense of what's up I just step to the side. No problem.

7-27-11 02:48 AM

---

============


Great! WTG. Should have been more patient with my 100.47 short.

Maybe this will retest the LOD the way it's going.

 ****************



What happened to ME during this session


As the 15m chart is flat for 4 days , the i deleted the all emas as I thought as it was no used.

And I felt a litlte bit rusty of inactivity for 3 days...

I then looked at the 2min MACD K, and my eyes immediately saw a beautiful divergence of the moment. Once I saw the divergence I draw a line at the MACD and the line at the price . I concluded that was a Resistance line. So I put a stop order to SHORT. Yes, I thought the price will stop and reverse at that line. I forgot that a line is just a fence and the price could jump over the fence. So, this is the 4th time in this journal that I took a wrong position at the fence, on the exact line. So this is a risk faced by a pure SR line traders. It could make and could break. When I put the ema back, it clearly show that the trend at my short entry is up but it have no predictive power for the next action, it's only react . But probably the ema will keep me thinking on the validity of SR lines. I t could save me, but depend on what I want to see at that exact moment.


1 minute later my short triggered- that's a surprised to me because I expect a wiggling entry. The price move up, and my point of entry to short actually should be a second point of entry to long after a wedge pattern (1st point of long entry - not taken).  My stoploss when its momentaryly gone up got me out at -90.  The K line now was no more a divergence but gone to the oversold line.I failed to see that actually the the price actually reverse up to the base at the top peak before taking a dive.

Then CL dive down to the abyss......leaving me speechless as I take a breather.

Tactical  Lesson A) When I see small  frame during  dead market.... dont forget to see the bigger chart. The big time frame is important to warn me for the potential of a big move out this dead market. To see this potential, I need the space. And this space only can be provided by big time frame.


Tactical  Lesson B)  The ema is a lagging indicator for the price. Maybe it is useful. The keyword is MAYBE


Tactical  Lesson C) SR is good for staging an ambush but it didn't show the direction. It could be BACKFIRED as happened to me 3 times, recorded in this blog. It's helpful to think SR lines as the fences. The price could jump over it. I need a 2nd opinion indicator to check the potential direction. Once I know the direction, yeah, the potential is limitless :)..hey isn't trading is always about the direction...not the crappy price action ?

Tactical  Lesson D) Divergence trading only for at extreme positions - Top and bottom and not in between. Use the big time frame eg 15 min for that. If I use a small time frame eg 2min. 5 min...that's not divergence trading, that's donkey trading. Like SR lines, I have been stung by DonkeyDivergence trading many times before...The sad part is not about the losers as it will be taken care by my trading partner Mr StopLoss, but the pains of losing opportunities of BIGBUCKS like today



Tactical Lesson E) Wedge pattern is valid. Yet, I always underestimate this because the price tend to be dormant before it goes wild and I dunno which direction the price will go after the wedge. DIRECTION again. May be a special order OCO entry useful here.


STRATEGY Lesson F) In big time frame chart, when you see a clear space (no clutters of SR lines) and market goes to the extreme point of top or bottom, prepare your mind that if you capture that move, you'll be richer than yesterday. 

Report at this time : Consumer Confidence Report at 10.00 am


Hopefully I will read this post 1000times to make me remember this great day and benefits the lucky souls who also happened to be read this. 

P.S. Imagine If I not distracted by that donkey divergence surely I will take the short at the beginning of the dive...hehehe...I know I know....Its useless to ponder it now...or If my account is bigger  I will stay with that short and history is made. heee

VIDEO , Price & Divergence

I will try to put a video of my trading in here ..hmmm how to do that is another matter

No trade yesterday But I would like to put some notes to remember.

A) Price pattern consist of : doji, hammer, pivot, SR line, wedge (NO INDICATOR and can be used in small Time frame  and big TF)

B) Divergence of Price and indicator only can be used in big TF : --- 5 minutes and beyond.

another +30

I short at the break, but market slow reaction made me decided out. market then rebound up. My 2.5hr completed and close pc for the day

+30 not stay the course

Now my direction is correct with the trend , but I jumped the train too soon and lost 500 opportunity.

But I know how to rectify my mistake by adjusting the time frame.

Hammer and wedge can kill the Dracula

Again , I'm exactly at the other side of the fence on the dotted line...
may be I need to write a post-it note...

Are you Sure Up ? Do you use stop order?

When using limit order, my emotion controlling my mind

 I short the market even though there many signals to long : the ema, the line , the indicator, the hammer, the pivot. My emotion win - my brain lose.Stop loss -90 save me nearly 500 .

I dont need ABC pattern at the moment.

But I need 2 BIG RED PILLS