"If You're afraid to fall, then you fall because you're afraid."
-- Daniel ILabaca
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found this video courtesy of @FuturesTrader71:
Fear of failure. This is an issue that occurs with many traders. The first time it happened to me, I took time off from trading. Now I think it is happening to me again.
To my knowledge, the recipe for dealing with such fears is to change my attitude. The primary concern should never be about being afraid to fail. As a trader, the primary concern should be about dedicating yourself to this craft, stalking the next setup, planning out your next trade, visualizing how you will perform when it really counts. The next losing trade is always going to be right around the corner, there is nothing that can be done to change that, therefore, there is also no purpose to be served in fearing it, or worrying about it. All paths towards the goal of consistency always goes through the facets of patience to wait for the right time and the right price to execute trades according to plan, and discipline to execute your plan in the same way, every time, day in, day out.
I think this is my interpretation of "living in the moment." Flush my mind of destructive thoughts, and replace them with constructive thoughts.
So it shall be with me, as I try to replace thoughts of fear of failure with thoughts of how I am going to plan and execute my next trade.
Tuesday, February 09, 2010
Choose Not to Fall
Saturday, February 06, 2010
The path to consistency
Consistency is the holy grail.
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Well, as this blog is my witness, i was unable to commit to 20days of posting the pre-market notes. As it turns out, there was a day where I could not find good trades, but I felt obligated to point out trades in my notes. So, the resolution to that conflict was to not write any notes.
However, once i stopped the first time, it was like undoing a good habit, which I do not want. So I will try a more modest goal, which is to produce daily pre-market notes for the remainder of this month. After that, I will re-evaluate.
Sunday, April 26, 2009
Euro Upside Exhausted?
Traded the EuroFx futures in the evening session.....
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Short E6M9 @1.3220, stop@1.3235, exited @1.3185
As mentioned in my Twitter tweet, I had a downside bias for the ES, and this also led me to a downside bias for the Euro as well. Euro opened Sunday Evening's session with a small gap down that was filled. But on the hourly chart, it looked like the odds were high of a continuation of the selloff that started near the end of Friday's session.
I watched the tape, and observed it spent more time in the mid 1.3225's rather than challenge the session high of 1.3241. So on the next time it made a new session low, I shorted. The retrace came as expected, but it was shallow, never exceeding 1.323, so my initial stop was safe!
Then I left my desk. I came back later to see it drop below 1.3190. My target was really 1.3155 (which is where it is currently trading as i type this post), but I covered my short @1.3185 for a couple of reasons:
1. I was not interested in holding thru a retrace that may go all the way back to 1.3220. As it turns out, the retrace never broke above 1.32, but who would have known that ahead of time?
2. If I had used the 9 or 20 EMA as my exit criteria, it would have gotten me out of the short at around the mid 1.3180's anyways.
3. I knew i would not have time to be at my desk to continue monitoring price action.
EuroFx futures (in general) does not move for more than 30pips without at least doing some kind of retrace, so I am learning to be at peace with hitting these small singles and doubles. I still long to hit those home run 100+ pip trades, but still have more mental preparation and tactical planning to do before I am ready.
UPDATE:
Euro is around 1.312 as I type. Yeah it sucks to have covered my short too soon. Kind of bittersweet irony to be talking about hitting a home run one of these days, and having a home run slip away right under my nose. But I knew I wasn't going to be at my desk, and I didn't want to scratch this trade, so I exited where I did. I suppose I still have some more learning to do in terms of finding the happy medium between not letting a profitable trade turn into a losing trade, and letting your winners run.
Saturday, March 14, 2009
VWAP re-visited
Review of Friday's trade....
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I was stopped out @753, gain of 2.75, but what hurts is that I left an additional 7 frickin' points on the table.
As usual, the timing of my entry was not the problem. The main issue was that i did not manage the trade properly.
There were two warning signs to exit the trade earlier:
1. Price could not break below overnight lows despite a downtrending VWAP
2. A series of higher lows and declining VWAP.
3. Time Stop - New lows made in the 10min frame prior to 644AM, but no new lows in any 10min. time frame after 644AM.
In terms of mistakes, I also failed to pay attention to TICK and ADD, two indicators that I usually use when trading ES. I was pretty close to the 10pts that I wanted to get out of the trade, and should have not been that greedy. Hopefully writing about this will internalize this lesson.
Anyways, once I started reviewing this trade, I also noticed that ES oscillated above and below VWAP, which as Dr.Brett has noted, is a good indicator of a range day. The earlier that I can recognize a range day, the earlier I can adjust my tactic to fade moves away from VWAP.
Looking back at my prior posts in the context of Dr.Brett's VWAP post, it looks like VWAP can help me to determine the market type for that session. This has given me some new ideas to try out for the coming week.
Thursday, March 12, 2009
For Future Reference
Summary
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I've had a bunch of small 1 to 2 pt losses in ES that added up to some frustation, and with today being rollover day, it caused my charts to load up strange (indicators are wacked), so I will take that as a sign to take a break, and post some charts to help me to internalize some important points to remember.
The above chart was Tues Mar 10/09. ES had run up +10pts in the overnight session, retraced a bit, then ran for another 10pts in the first 45min. of the session. Around the 7am reversal time, it paused again, this time forming a box play pattern. Going long after a 20pt run-up typically is not a recipe for success, so that just emphasizes how reliable this box play pattern is.
In this particular case, there was a retrace after the intial breakout of the box. So one would have needed a 2.5pt - 3pt stop (705.5 - 705), reward being at least 4pt target (712). To increase the profit potential, one could add to the position on the second break above 708.
Normally a series of lower lows makes for a good candidate to go short. However, this was a downtrend after the monster +42pt gap and run-up in the previous session. Shorts get a little antsy about a +42pt run-up, and when market gapped up, the first TICK retracement was a chance for the shorts to cover on the gap fill attempt. Selling accelerated on the break below 725 to confirm TICK retrace. Any reversal close to the gap fill level (716) would be a good long entry. In this case, ES ran 10pts from the reversal. If one missed the initial reversal, a break of the downtrend line presents a good second long opp.
Friday, February 27, 2009
Trader personality
Summary
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As I have mentioned in previous posts, patience (or lack thereof) is one of my weaknesses. To be more precise, I have the patience to wait for a high probability chart pattern to fully develop. But once I do take a setup, I find myself impatient in waiting for the tape to move and/or continue in my direction. This impatience has often led me to exit the trade early for a small profit/loss. Keeping my losses small is great, but missing out on big profits doesn't feel so good.
What I wind up doing is trade the first thrust, and exit on signs of a pullback. When price pulls back after the initial first thrust, there are only 3 outcomes: continuation (ie. pullback reverses and continues on in the direction of the first thrust), reversal (ie. first thrust fails), or sideways chop. In the current market environment, the probability of a first thrust continuing on after the pullback is not that great.
So what to do about it? Perhaps I need to find a better spot and better time to enter the trade. Which goes back to the point of requiring more patience.
Also, I can also re-start the practice of entering support/resistance levels as alerts in my trading platform. Also wouldn't hurt to read up on what Dr.Brett has to say about this.
Wednesday, December 12, 2007
Plan for the next couple of months
Even though I will not be actively trading for the next month or two, that has not stopped me from continuing to monitor the ES market. One thing that I have noticed is that in the overnight session, it is usually quiet, but if there are any big moves in the overnight session, then it usually is a precursor of a big move in the regular session as well. For example, this morning's bounce in the market was started off with a +13pt uptrend in the overnight session.
Of course, a big move in the overnight market is not a pre-requisite for a big move in the following regular session.
This year's big sector winners was the solar sector (which I mentioned a couple times in this blog), and shipping. The agricultural chemical sector started perking up in the latter part of this year, and should continue into next year. I am already monitoring AGU and POT for a pullback entry in my retirement account. Obviously I am interested in uncovering the next big sector, maybe this time I will be prepared to jump onto the sector trend.
The other plan for the next couple of months is to continue to work on my ATS. I've been trying to find time here and there to code up a very simple ATS. Progress has been a bit slower recently because of various distractions. Plus, I have to remind myself from time to time why I am doing some more coding after doing already 9+ hours of it at work.
Friday, November 09, 2007
The ATS as a Tool
-Anonymous asked:
"You mention that you want to train yourself to make trading decisions in a more mechanical manner... And that you're a programmer by trade, so what I'm wondering is- Why bother making realtime decisions yourself? Why not code up a fully mechanical system to react exactly as you want?"
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The answers to your questions - 1. Because I currently don't have the luxury of an ATS to trade for me, and until I do, I will have to make the trading decisions myself.
2. I've never really seriously considered coding my own ATS, probably because I know I lack enough willpower and motivation to see it to completion. Also, I cling to the belief that it will be easier to train myself to trade off my pattern catalog than it is for me to program an ATS. I realize that that may not be a true statement, but the motivation factor is real for me at this stage.
I know that there has been a debate of religious proportions going on in trading blogland over whether computerized trading systems will take over the world as we know it. I'm realizing now that I won't make it through this post without forming some sort of opinion about that issue.
My take.
No amount of artificial intelligence will know what the correct trading decision will be in the following situation:
The above chart describes an observable scenario - the Loonie topped out. But the topping action is unmeasurable (there are no parameters for the above top), unquantifiable (there is no pre-defined, rule-based characteristic of the above top), and unreproducible - every topping action is unique. So without these 3 qualities, a computerized system would be crippled and be at a huge disadvantage to the discretionary trader.
That said, however, an automated trading system guided with some human input (in terms of what to look for, and when to look for it), will be able to bank big coin in the above scenario.
I started this post with a bias that the discretionary trader will beat out an ATS in any given scenario. However, now, I am thinking more along the lines of using technology to my advantage. To me, it is not a question of whether the ATS is better than me or not, what I realize as more important now is that I should use an ATS, because I believe it can improve my trading.
So, even though I probably won't program my own ATS, it may be worthwhile to investigate some existing ATS products out there, or even the hacked quasi-ATS from Boogster. Thanks to Anonymous for providing some perspective on this.
Thursday, November 08, 2007
Trading Results for Thursday
Specialists win, Generalists lose.
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After my previous post about training myself to trade off patterns in my pattern catalog, I still went ahead today and made a trade based on tape reading.
I don't think I will trade the 7am reversal exclusively, but it's interesting to note that this is the third time this week that this pattern has occurred.
I just need more practice to trade off my pattern catalog. So the journey continues.....
Calling All Wolfe Wave Practitioners
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Linda Raschke identified a nice Wolfe Wave pattern in the intraday session last week:
So with that in mind, if you, or someone you know of, is a Wolfe Wave practitioner, then please refer to the following chart and let me know (assuming that today's intraday low of 1455 holds up as the swing low) if this is a Wolfe Wave.
Wednesday, July 25, 2007
Trend Days
Some of my own observations of trend days.
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I have an archive of the eMini S&P500 Futures intraday charts from the past three and a half months. I went back to review the charts to see how many of them were trend days.
Before I share the results of that research, I want to first qualify what makes a trend day. The Market Wizard Linda B. Raschke wrote an article about it. She characterizes trend days as follows:
To that, I would add the following additional characteristics:
- typically, either the 10 or the 20MA has not been breached for more than 2 bars during the life of the trend. At a minimum, it must follow a manually drawn trendline. This is paraphrasing LBR's point about minimal and shallow retracements.
- trends typically take 3 to 6 hours to run its full course, although I have seen nice trends start and finish within 90 minutes. From this we can infer that as the trading session progresses without any signs of a trend, then it becomes more and more unlikely that a trend will develop. The absolute last chance for a trend to develop would be around 2pm EST.
Anyways, my own review of the daily ES charts reveal 26 trend days out of the 86 trading sessions that I have archived. That means a trend day will occur 29% of the time. Just to be real conservative and unbiased, let's throw out the worst 10 of those trend days. Then that will reduce the frequency of trend days down to about 18.6% of the time. Well, guess what, that means on average, a trend day will occur (almost) once per week !!! Yes, believe it or not, a trend day occurs more often than you think. So, the implication of this is that each trading session that occurs with out a significant trend taking place actually increases the odds of trend day happening in the subsequent trading sessions.
So, starting from the acknowledgment that we will never truly be able to predict with 100% accuracy whether today will be a trend day or not, we can still gather pieces of information which will help give us an edge in identifying trend days.
In that same article, LBR outlines some tips to help identify which days will be a trend day. I want to increase the odds even more. Here are some additional things which I think will help me identify a trend day.
- economic reports. Nothing moves the markets better than a better or worse than expected economic report. Sometimes, these economic reports can trigger a trend day, especially reports that are released at the 530am or 7am(EST) times. Some of the more significant ones that are known to move the markets include the CPI, PPI, retail sales, and of course, the Federal interest rate announcements.
- breach of a significant support/resistance level. Breakouts fail as often as they succeed, but the ones that do actually succeed tend to set the tone for the day, and thus more likely to produce a trend day.
Ok, that's what's in my head at the moment, hopefully I can use this knowledge going forward to take advantage of upcoming trend days.
Tuesday, July 24, 2007
Still a Noob
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For the past month or two, I have been working hard on cutting down on my overtrading habits, developing a trading plan for the day and cultivating enough discipline to stick to the plan, and of course, improving upon my patience.
I thought I had improved in these areas, and up until today, revelled in that illusion. But today, I discovered that I am still a noob stuck at the beginners level when it comes to trading futures.
Today was a trend day in the indicies. Of course, no one knew that at the beginning of the session, but as the morning progressed, it became more and more clear that it would be a trend day.
I had two chances to partake in this trend day. In the first opportunity, I went short based on the double top formation. The call was correct, even though the entry may have been a bit early. Unfortunately, as soon as the trade went in my favour, I basically wanted to protect my profits.
In the second opportunity, I was impatient with letting the trade develop. It dropped down to a support level @1538, and ran back up to my short entry @1540, but never took out my initial stop, or even my revised stop, for that matter.
So had I left the trade in place, with the original stops, I would be sitting pretty. Instead, now I have to write about what I did wrong, think about what I could do differently the next time, and try to accept the bitterness of this pill that I have to swallow. I don't know what it is about me that makes me want to take profits so soon. I really thought I had progressed past the noob stage, but apparently I have not.
This market has absolutely no room for self-pity, so I'll probably spend the rest of tonight accepting the fact that I am still a noob. I might take tomorrow off to regroup, and refresh my mind (unless we get another big trend day).
Thursday, July 19, 2007
Tape Reading Books
There's not much out there....
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Yes, I have entered the tape reading phase of my trading career. I mentioned before that there just isn't that many books on tape reading. A search on Amazon yielded the following books:
"Studies in Tape Reading", by Richard Wyckoff.
This book was originally published in 1910, but it seems to be popular enough to have lasted until today. I've come across a couple good reviews of this book from various trading websites. I think any trading methodology book that can stand the test of time and still have decent reviews is worthwhile to take a look at.
"Tape Reading & Market Tactics", by Humphrey B. Neill.
This book was published in the mid-1930's, and it also has received favourable reviews from various trading websites. And at a cost of less than $10 on half.com, it might be worth a shot even if it turns out to be a mediocre book.
"Techniques of Tape Reading", by Vadym Graifer
This is the newest book on tape reading, published just a few years back. It has received mostly positive reviews on Amazon. TraderGav also has it on his virtual library, but I don't know whether he has actually read it or not. If anyone has read this book, please leave a comment on whether you liked it or not.
Wednesday, July 11, 2007
Tape Reading Video
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At TradersLab, there is a 3-part video of a trader showing how he's using the tape (and the TICK) to enter a trade in the YM. Interesting and educational to follow along his trade.
I think I will have to start using QT's T&S window more.
Thursday, June 28, 2007
ES volume charts
It's (almost) all about the volume.....
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This is a 5-min. chart of ES from today's session:
This is a 7000/bar volume chart of the same session, starting at the FOMC announcement time:
The volume chart provides much more detail as to what is going on in between each 5-min. candlestick. The most obvious example that I can point out is the 1130am reversal @1518. In the regular chart, it shows a wide ranging bar, followed by another bar with a long upper wick. In the volume chart, you can see how the reversal actually unfolds, and I was able to actually "see" it coming in time to get out of my short.
Today was the first day I traded mainly off the volume chart, and I thought I did fairly well. I am starting to like the volume chart more than the PnF chart, because the PnF does have a bit of detail missing which I can find in the volume charts.
The volume chart tells me what it is doing much better than the regular charts, so I will start to use it more. I will continue to keep the regular 5-min. chart open, just so I can see any chart patterns develop.
Friday, June 22, 2007
Volume charts
started looking at volume charts last week.....
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Here is the chart of ES from today's market session:
Now, here is a volume chart (6000 contracts per bar, 250bars total) of the same market session:
Volume charts are fast becoming more interesting to me than the regular intraday charts. For one thing, I can see the change in momentum happening much more clearly than with the regular intraday chart. Not sure if this is typical of all volume charts, but I am leaning towards using them exclusively for my trading. In the mean time, I will start using them alongside the regular intraday chart starting next week.
Tuesday, February 20, 2007
Portfolio Management Notes
Some notes to myself as I learn first hand about managing a portfolio of stocks...
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Position size matters - I did not go through the normal routine of calculating position sizes for the uranium stocks that I bought yesterday. As a result, a routine sell when one of the stocks hit my stop caused a bigger loss from top than expected.
Protect the portfolio's overall value - when the portfolio hits new highs, then some form of protective stop for the whole portfolio should be considered in order to protect the profits. I know this goes against the notion of trading the charts, so I will need to investigate this in my spare time to see if I can work out some sort of compromise solution.
Perhaps if I have correct position sizes, then this might be a possible solution, or an intraday chart of the portfolio's equity value might help to decide when to sell/hold.
Keep the number of stocks to a manageable sizee - I had 9 open positions, which was probably too much to monitor and track effectively. Probably better to have only 5 or 6 open positions, then it is easier to respond to stock specific technical events (like a gap up for instance).
Learn about the different types of portfolio - there's a portfolio of unrelated stocks, and then there's a portfolio of stocks in the same sector. The second portfolio behaves differently from the first. Learn about and characterize that difference in behaviour.
Thursday, February 08, 2007
30R's of Inspirational Trading
The guy only made a measly +11R today, he must be slacking off.....
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This has to be one of the most inspirational series of trading blog posts (best read from bottom to top) that I have ever read. Ever. If after reading that, you are not motivated to trade better, then, well, I just don't know how to help you.
I'm just grateful that he's taken some of his valuable time to show us that it CAN be done.
Thursday, January 18, 2007
Jesse Livermore
I read the first 7 chapters of "How To Trade Stocks" that were actually written by Jesse Livermore (the remainder of the book was written by someone else). I'm starting to see why this guy is so amazing.....
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There is a scene in "It's a Wonderful Life" where George Bailey is sitting at Mr. Potter's office and listening to speech by Mr. Potter about a "once in a lifetime" chance at the comfortable, affluent life. In his diatribe, Mr. Potter guesses that George is earning about $40/week, and George immediately interrupts him by emphatically declaring that he actually earns $42/week. Mr. Potter is offering George a chance to work for Mr. Potter for the annual salary of $20,000. That amounts to over 9x the salary that George had defiantly declared he was making. To put that into modern day terms, that is about the equivalent of a CEO salary (on average, the CEO earns about 9x the joe average salary worker).
So, what does this have to do with Jesse Livermore? Well, George Bailey and Jesse Livermore both lived at approximately the same time period (Livermore traded in the late 20's and early 30's, while George Bailey's story took place around the late 30's). So where the average salary worker at that time made $2K or 3K per year, Livermore made trades of 2 or 3 Million ! To put it in today's terms, that is like trading 1000x your typical office cubicle worker salary - making a $50 Million profit (or loss) from a couple trades. I don't know about you, but I wouldn't have the guts to make a $50 Million dollar trade.
I know that "How to Trade Stocks" is not one of the better books on Jesse Livermore, but that was the only one available at the time at the library. However, I did come across "Reminiscences of a Stock Operator" online (check the link at the sidebar). I think I might skip the remaining chapters of Van Tharp's book and just start reading all about Jesse.
Wednesday, January 03, 2007
GHDX
Took a shot at a low volume, smallcap biotech stock.
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1. Why did I take this trade?
Because the stock was showing all the signs of a classic breakout pattern. Volume was there (at least for this stock, 400K shares traded is considered high volume).
2. What was the initial stop?
1% below my entry point.
3. Why did you exit where you did?
I got scared out of my position. Watching the profits shrink instead of letting the trade work itself out played in my head.
4. Is there anything you would do differently?
I think watching the ticker drop from 19.85 to 19.45 made it hard for me to feel confident about my trade. Had I not been actually watching the chart of GHDX during that 0.40 pt plunge just before 12p EST, I would have probably stayed in the trade.
Note to self: This is a good example of the need for a plan to sell half of your position, and keep the remaining half. The first half of my position should have the tighter stop (19.75), and the remaining half of my position should have a looser stop (@19.24, or breakeven).
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