Refresher Course

Apparently a little review is required as we strayed from basic concepts:


[23:00] <@Anek> in order of importance
[23:00] <@Anek> AHG Price action
[23:00] <@Anek> Patterns to supplement yourself in areas of congestion or possible reversals
[23:01] <@Anek> and last 3br for precision on entries
[23:01] <@Anek> all with the heavy use of trendlines
[23:01] <@Anek> the rest is money management and discipline

Trading Rules

personal trading rules
1226174645: Dont call a top
1226174648: Dont call a bottom
1226174651: Dont trade against anchor trend
1226174655: Dont average down
1226174659: Dont anticipate a TL break until it does
1226174704: Dont ban porn
1226174705: Dont trade against the trend
1226174713: Look for confluence in falling knives
1226174716: Dont listen to news
1226174718: etc etc etc

Still sitting on hands

This market started out so slow it just lulls you to sleep and then when it finally moves.... This was a very simple all down day. Started with a double top that was confirmed and then proceeded to make lower lows and lower highs the rest of the day. Simplicity confused by insisting on confirmation from a higher order chart. Not as easy as it looks, though. It was so thin I left for the late afternoon. And after blowing out a QQQQ long from yesterday at a small profit I got sucked in to buying it back slightly lower and it ended down on the day. Why did I get sucked into taking a long when the trend clearly was down all day?

This Message really Resonated

So today I got this email from Joe Ross. He sells trading courses and such, so I view him a bit as a snakeoil salesman. However, his holiday message really hit a note with me! I am not at all religious, but if I ignore the God part of this, it is a very important and very powerful message. Here is what he wrote:

This is the time of year in which some people in the world think at least a little about God.

All traders, sooner or later, begin to realize that there is something more to trading than learning to read a chart, following an indicator or a trading system, or discovering a method or setup that will work a high percentage of the time.
If you didn't fail early in your trading business, then you have probably been around long enough to realize that many of the problems you encounter as a trader are those that derive from your own individuality. Such problems are common among traders and, in fact, common among all human beings.
One of the greatest problems faced by traders is that of fear. Over the years I have discovered a path for overcoming fear. The Bible states: "Perfect love overcomes fear." [interesting…. but not into bible]

The top 3 fears among traders are: fear of missing a trade; fear of losing money; and fear of being wrong (pride). [for me #1 and #3] Interestingly, the Bible also states that "Pride precedes a fall."
If you are constantly being beaten by the market, it's pretty hard to love trading.
Your original passion, which is really not true love, rapidly dissipates, and you find
yourself in battle with your own individuality and with no great love for trading.
Eventually, around 90% (some think more) fail at trading.
The path I found to "perfect love which overcomes fear" is also in the Bible. It is in the fifth chapter of a book called Galatians, in the New Testament. In verses 22-23 it says the following: "God's Spirit makes us loving, happy, peaceful, patient, kind, good, faithful, gentle, and self-controlled. There is no law against behaving in any of these ways". [and no law that you cannot behave this way without “God”]
I thought about these passages for a long time, and then realized that if I tried for
the items mentioned in the list from back to front, I could achieve the state of loving
trading. [ie self-controlled gentle faithful good kind patient peaceful happy loving]
The very first thing I endeavored to do was to gain self-control. This is something we can consciously set our mind to doing. It involves discipline, and we can make up out minds to be a self-controlled, self-disciplined person. When I achieved a certain measure of self-control, something interesting happened to me — I became gentle in my approach to the markets. I quit treating trading as though I were in a war; I quit being violent in my approach to trading. As I became more gentle, another thing happened: I became faithful to myself and to what I was doing. I began to have an increasing amount of faith in my approach to trading and in my ability to carry out my trading plan. Being faithful then led to becoming good at trading. I became better and better at it, I became a good trader. Amazingly, becoming a good trader led to my becoming kind. My whole attitude towards trading changed. I could now use the money from my trading to help others. I was no longer at war with the world. Selfish greed was being replaced with compassion and kindness for those who were less well-off than me. Kindness then evolved into patience. I became a patient trader. Because I believed in myself and in what I was doing, and because I now had an objective to trade for the benefit of not only myself, but of others, I was willing to patiently wait for the trades that gave me a high percentage chance of producing a winner. I patiently waited for the trades that had my name written all over them. I learned which trades were for me and which ones were for someone else. I was at peace, I became a peaceful trader.

Today I am not at war with anyone. All I want is my piece of the market. I don't want your piece, just my own.
The result of all of the above was that I had become and remain a happy trader. Trading brings me much joy and happiness because my entire attitude is one of giving rather than taking. Trading has made me into a loving trader as well as a loving person. I am in love with trading and markets. I love trading because trading treats me well. I have gone beyond despair, beyond envy, beyond anger and beyond selfishness. More than that, I have been able to pass that same philosophy on to others, especially those who are our staff here at Trading Educators.
We truly love and care about all who come to us with a desire to learn.

[deleted reference and link to “The Spiritual Side of Trading” LOL ]

It's getting better all the time

I used to get mad at my school,
The teachers who taught me weren't cool.

OK, but now they are. And I am learning to trade, after 22 years of trading. I have gotten better with some online help and things are improving. Slow time of year now, but still plenty of opportunity. I just sat on my hands through an options expiration that actually turned out to be a good trading day at the end. However, my plan was to trade sim and sit it out, so I stuck to my plan.

Today's record: 1-4-1

Yes, that's right. 6 trades, 4 losers, 1 breakeven which is actually a loser less commision, and only one small win - stopped out for a small profit on a trailing stop.

So, what am I doing right? I am keeping my stops tight which keeps my losses small. I am generally being patient. I am recognizing opportunities.

What am I doing wrong? (Besides losing money). I am perhaps keeping stops too tight, certainly trailing them too tight, and I am not acting on opportunities.

How to correct the things I am doing wrong? More screen time and fewer interruptions during the day.

TRADING RULE #1: Anything Can Happen

TRADING RULE #1: Anything Can Happen

This is the number one rule. I keep reminding myself, yet I keep forgetting. Today the NQ opens lower and then proceeds to wave sideways to slightly higher throughout the day. I note that following a new low put in at around 11:10 am a series of slightly higher highs and higher lows proceeds, which defines an uptrend, but it is more sideways than up. A push to 2088.25 occurs at 3:25 and then the last 1/2 hour is straight down. Here is where I dropped the ball. Did not identify critical support zones that would have changed trend. Did not note that on the longterm chart price had touched a very longterm trendline and bounced off of it. So, new lows made... from highs to new lows in 30 minutes and a crap day stayed crappy. Stay alert, stay tuned in to support, resistance and identify the trend and remember..... anything can happen!

Important points to remember

Critical points in trading:

Yes, psychologically it is hard but if you are looking for a high accuracy big winner small losing system I cannot give it to you. I still lose multiple times a day, just small. It does not bother me, it's part of how this stuff works.

Three,four,five losers who cares, when I really catch the ball they become a thing of the past.

Why do you think the failing percentage is so high in daytrading ?

Some might say lack of edge, some bad money management, etc etc.

Predominantly I think it's the very same psychology barrier you speak off.

Traders have absolutely no problem allowing losses to become bigger, possibly because they have to be right or cant' handle a small drawdown (what a concept) but as soon as something runs their way they are quick on the trigger to take profits and that's no way to beat this game.

and, Patience is extremely important, good trades don't pop every 30 seconds. If you find 3-4 in a day you are doing above average.


Anek

Unenjoyment day

Without going into gory detail, I know what to do, I just don't seem to do it - at the right time. 0 for 3 today, at the end of the day recognizing the trend was up but not finding an entry point.

First trade, at 9:43 short at 2221.25. This was "almost" a great trade (sigh). Although I had already missed the double top at 2234.50 which was confirmed below 2224.75 I did sell the uptic and got stopped out very tightly at 2222.75 (high was 2223.75) so I would have needed a 2.75 pt stop to not get stopped out. This trade, intact, would have gone for 28 points. Oh well.

Second trade 12:09 short at 2206.25, sold what I thought was a break of support, market reacted spiking downward which allowed me to move my stop down and it got hit at 2206.5 for a loss of .25 tics. Breakout was false and market headed higher from there.

Third trade 3:17 short at 2216.50 selling against an earlier high, got stopped out 2218.25 as market headed higher.

Market had been in a downtrend from 1pm, and at least I recognized that downtrend was over and it would move higher into the close, but I could not find a good entry around 2222, and move down broke support at 2217.50 which scared me off. Low print was 2216.75 and we got our double top 2231 after the close.

Rearranged charts today. Keeping the 1500 volume bar off to the side. Making the big chart a low number tic chart (39 or so for NQ) which is all price action all the time, and including 5 minute and 15 minute bar charts which indicate trend. Also using a 10000 volume bar chart to keep track of bigger picture trend.

Bad day for the market / bad day for me

Well, not a really horrible day for me, just more frustration in missing big moves. I was not totally focused today as I had to leave the house for a good part of the morning. Also, while the Dow and ES trended downwards, the NQ was sideways for much of the day. Unlike many other days I can't even do much "woulda shoulda" today because following my rules there were not too many missed trades. Only did one trade early for one small loss and then was reduced to an observer the rest of the day.

Interesting how I got shaken out of my extra SDS yesterday (although at least at a small profit - and the small QQQQ sale looked ok today). My experience was likely duplicated many thousands of times by others who were worried into the Fed action and then covered shorts or got rid of hedges later in the afternoon when the market appeared to be "OK." So now that everything looks dark and bearish we should have a bounce tomorrow..... unless it crashes! ES daily touched a newly formed trendline.

6D Tnote reversed sharply a TY closed up a full point at 111-00. Need to trade this system with a stop loss.

The "Anxious Trader"

I was perusing the great trading blog of Dr Brett Steenbarger. He identifies 4 problem traders, and I definitely see much of myself in the one he identifies as problem trader #2, the anxious trader. I am going to cut and paste from his blog, because this is a private blog. If somehow this becomes more public I would provide a link to his blog rather than copy it. Just be aware that this is his work:

The anxious trader is consumed with fears of loss, missing out on objective opportunity either by not taking signals or by sizing positions too conservatively. In a sense, the anxious trader is more concerned about not losing than about winning. This risk aversion can lead to analysis paralysis, as the trader waits for the perfect setup that never quite materializes. Sometimes the anxious trader is one who has been traumatized by prior losses. It's too painful to relive memories of those losses, and so the anxious trader exits positions too quickly and is too reluctant to get into positions. A very common feature is cutting profits rapidly out of fear of losing those. Signs of the anxious trader include muscle tension, worry, relief over getting out of positions (or away from the screen), and inability to trade reasonable size. The key strength that combats anxiety is confidence and an ability to accept loss as a natural part of trading. The techniques most helpful in combating anxiety include cognitive methods for replacing worry talk with constructive problem solving; behavioral techniques to calm oneself and reprogram stress responses; setting process rather than outcome goals; and regaining confidence by trading successfully in simulation mode and gradually building one's size.

The good news for me is that I recognized a while ago that one of my problems was my fear of being wrong. It can't be fear of losing money, because I am risking at times as little as $10 !! and almost never more than $50. I do get overanxious when I am in a position, and recently have gotten out WAY too quickly for way too little profit. But worst of all, I do not pull the trigger. That is my biggest problem: I am not trading enough! Today I saw the double bottom forming, I called it a double bottom, and I even recognized that I could buy it and set a very tight stop, so risk was minimal. I did not take the trade and watched NQ rally 50 points! This is the type of thing that is killing me! But I am making progress which is encouraging.

Fed moves / market moves

Fed went 25 bp as expected, and also as expected indicated that they were shifting to a neutral bias which should limit the market's expectation of another cut at the next meeting. NQ formed a perfect double bottom and rallied bigtime, a cool 40 points off the DB. I was nervous pre number and bought 400 SDS to "hedge" my portfolio exposure. Fortunately I sold it out for a small profit after the Fed rate announcement. T notes sold off as once again the 6D system provided a valid sell signal with a maximum of 4.5 tics heat!

Waiting for the Fed

Quiet day today waiting for the Fed. NQ was up overnight and made a big new high, 2230.25, then went down and tested the daily pivot (2205.25) low was 2204.25 then meandered higher. Treasuries flattened. Apparently there were curve unwinds in front of the Fed and some month end maturity extensions. USZ closed up 5 while FV was down 2.5. I made just a little bit $$ scalping NQ. Sold a breakdown and made an instant 2 ticks. I need to trade more - even if I lose money I am not learning anything by making 2 trades all day.

My new blog

This should be a good place to write post-market impressions of my trading. Today was a wild day. NQ went down down down, formed a nice W bottom, then went right back up. I did not do a single trade today. Actually pulled the trigger on one trade but the system lagged slightly and I missed the entry so canceled the order. I went out to lunch and we had people over in the afternoon which distracted me from my trading, hence no trades. Read some interesting web material this evening. One site has a trading system that derives signals from the Nasdaq index, so I will chart the index for a while and see if it gives me different signals from the NQ chart. Another site gave some basic ideas for day trading with the trend. 1. Pivots (which I don't like for determining trend), 2. HH, HL, LH, LL, which is exactly what I do use (plus trendlines), and 3. Indicators, specifically 2 moving averages and a stoch cross.

Trading from home

This has been my dream for years, and now I have been living the dream for nearly seven months, and while not quite a nightmare, the dream is far better than the reality. I have studied and studied and logged screen time and narrowed my focus and I do have a trading plan and I do have a day trading methodology and now I just have to make it work. The major problem is still taking the trades.