Aphie's REAL Trading Journal

I definitely agree that the S&P futures are controlled by "them"; but in no way do "they" have any effect on the traders results, nor do "they" do anything to you the trader.

If you can't beat um, join um.

You need to start to think like "them" and trade with "them". Like a FBI psychological profiler trying to catch this madman sniper, learn how he thinks.

 

I'm not quitting until one of two things happen.

a) I die.

b) I end up broke and living in an old beat-up van down by the river.

 

Disagree. There are plenty of individuals with undeveloped talent that simply sucked at some sport and were going to give up when an intervention of some kind took place. One can imagine this is a contribution to the huge negative connotation of "quitters," the force of which caused some to try harder and succeed. In other words, if they didn't get that message, they may have well quit.

 

Aphe,

As I've mentioned to you before, trading a 100% mechanical system is the most boring thing I do all day. It does indeed feel like an "order operator". But at the end of the day/week/month, you look at the profits and just smile.

The fun is in the constant research to improve on your model or build newer ones. But cranking that money wheel is booorriiing! It's the nature of the beast.

Talk to professional poker players. They will tell you the same thing. (I know, I used to be one.) You are making moves so routine you are like a robot. You know when you have a +EV move and you either call, fold, or raise. No emotion involved. Tis the same with trading, my young pad-wan...

 

Isn’t it amazing the amount of attention the adventures of young aphie has drawn. No doubt because it/he has touched a cord deep within.

Maybe it’s because we see something of ourselves in the boy.

• * His unbridled optimism – we encourage his so that our own won’t die.
   His naïveté – remembering our own, and wishing to recapture just a little bit of what is now gone.
   * His obvious blunders – making us recall our own, remembering the pain, and trying to spare him the misery.

There is a darker side as well. Much of what he posts is humorous in it’s pomposity, and arrogance. There is a sick joy in watching it come back to bite him on the ass. And that can not be denied.

 

this should make you realize something. whenever i feel like i traded really bad, i realize that someone could have done the opposite of what i did and made a lot of money. i bet you'd be happy with making 10% of your account in 2 days. i know i would. i don't know about you, but i'd be happy to MAKE money at the rate i LOSE it. it would be a little less because of spreads and commissions, but you could still probably do pretty good. i know this is easier said than done.

anyway, i don't know the answers either, but here's something to think about. i have a tendency to think that trading has to be complicated. i say this because at first glance, if everyone loses money so easily, to make a lot of money, you'd think you must have to do something tricky. but you were able to lose 10% with a method YOU ALREADY HAVE. it just goes to show you, you probably don't need a complicated system to make money. you probably just need rules to make you trade the opposite of how you WANT to.

this brings you to the real issue though. how do you define what you're doing wrong? this is my endless struggle. if you wanted to trade the opposite of how you traded those 2 days, how would you do it? you'll probably feel lost because it's hard to define what you did wrong, especially since you thought you were doing the RIGHT thing at the time. that is why trading is so difficult, imo.

i guess you should try to find out what your reasons were for making the losing trades? what were the market conditions at the time you made the trades? and also, what were YOU THINKING when you made the trades? what made you pick the time and direction? maybe in the future, you should write down exactly why you're making every trade so that you can go back and see why a loser worked and why a winner worked. the funny thing is, i think this is great advice, and others have given it to me as well (i distinctly remember nitro saying this to me, exactly), but i've yet to make myself do this very thing...not on one trade ever. maybe that's my problem. as you know, it's easier to give someone else advice than to solve your own problems.

anyway, i'm only a few pages into this thread, but i'm glad it's been constructive so far.

but take my advice for what it's worth. i don't make money either.

 

I know EXACTLY what I did wrong. I made trades without any good reason to make them. I over-leveraged myself and caused myself to come a few inches from a panic-attack while watching just NOISE in the ES market.

I did not have the patience to wait for the market to come to me. I didn't have the discipline to stay out of the market when my inner-self wanted to "play."

Knowing what I did wrong is not the hard thing. Learning how to correct those impulses to go against yourself is what I find most challenging. There is two sides to my pysche:

1) I have the urge to want to "gamble"

2) I have the urge to make money.

Now 1 and 2 don't mix. I need to do boring things to make a small amount of money consistently over a few months, and THAT is where I will be focusing most of my attention. I will have to reduce myself to a mechanical robot, and not take random trades that are akin to spinning the roulette wheel.

To put it bluntly, I have to learn to do things that I normally have a tendency not to want to do WHILE also not doing those things which I love and want to do -- and that takes WILLPOWER.

 

i've found my WORST trades are the ones where i let myself trade with no plan what-so-ever. we all know our emotions are our enemy when trading. so, obviously, you should try to find out why you make such bad decisions trading without a plan, and trade the opposite.

another problem here is that you will only find these answers trading real money. only when you trade real money do you make these bad decisions. so i guess you may have to make a few more losing trades....or just study the ones you've already made.

 

A couple of comments:

1) Let me clarify the distinction between a "system", and trading with "discretion" as I see it. In a system you identify certain factors which produce a signal which when acted upon produces a profit over time. You act upon this signal each and every time it presents itself because you cannot determine in advance which signal will be right, and which will be wrong. And the human mind is such that it will manage to filter out the correct signals and only take the poor signals. Trading with discretion might take that same system, and apply some thinking to the system....ie, take certain signals versus others, depending on the traders "judgment". Or trading with discretion could be trading when certain kinds of conditions are present, but not formally systematizing this trading plan. Of the two, you do NOT have the knowledge at this time to apply ANY type of discretion. Therefore, you should develop a "system", or a "plan" upon which you trade, and from which you don't deviate. Over time, as you learn, you may wish to modify that plan, or add elements to the plan. But the idea of using discretion at this time for you is only a route to disaster.

2) I've traded most of the vehicles out there. One are that I would stay away from if I were you is options. Options are more complicated than all of the other vehicles, in that the trader must not only be right on direction, but he must also take into account the time premium and whether that is fair at the time. Most people that I know lose money trying to trade options. There's no reason to assume that your experience will be different.

3) You are being counselled to try the ETF's, etc....counselled away from futures. Evidently the reasoning here is that the risk is too big for your account size. I agree that the risk is big for the account size....but frankly I think that risk is appropriate for someone of your age. I'm starting to think that many of the posters here are more conservative than my Grandma! I would focus on the futures if I were you....but I would do some things before I risked any more money.

4)You could go trade a 50 share lot of QQQ! Whippee kayea! Just think son, it won't make you nervous! No kidding! If it makes a .25 move you make $12 less two commissions! Don't spend it all in one place.

5) Let's call that $5K less the haircut you already gave it you risk capital. You're young. If you lose the $5K you can make some more can't you? And let's assume that because you're taking a risk, your heart is going to pound! So what???? I got news for you,a pounding heart is NORMAL when you take a risk that you're not used to. That doesn't mean the risk is "bad". At one time I took the "risk" of jumping out of airplanes, getting shot at in a war, etc etc. Better believe my heart pounded. My heart "pounds" to this day at times when I trade. That's reality.

6) To REDUCE your stress you need a trading plan. You need to KNOW what type of trade you're going to make, when you're going to make it, what type of stop you'll set, how you'll manage the position, and where and how you'll take a profit. Then, you take a position and WATCH.

7) The trading plan should be developed by watching the market and observing price action. Understand that you don't need to develop a plan that trades every day necessarily. You don't need to develop a plan that captures the entire move. What you need is a plan that utilizes some "set-up" or strategy that will consistently allow you to a) minimize your loss and b) produce a larger profit over time.

8) You will be unable to develop a plan which is always correct. You might only be able to develop a plan which is 50% right for example. But if it's 50% right, and allows a small loss when you're wrong, and a big gain when you're right...hey, you're onto something.

9) An image that has stuck with me since I was about your age was the image of a guy I read about who was successful at betting on horses for a living. He would sit quietly in the stands WAITING for just the right set of circumstances in terms of horse, jockey, track conditons, and odds before he would make a bet. Days might go by. In other words, this is what sets apart the gambler from the speculator. The "speculator" doesn't need the action. What the speculator does is WAIT for the RIGHT set of circumstances that he KNOWS based upon observation lead most of the time to a large profit. Otherwise, he doesn't play.

10) Because of your smaller amount of capital you need to consider what you risk on each trade. I don't know what the minimum for trading is at IB, but let's say it's $2K. That means you have $3K to risk. That means if you risk $150 per trade, you could lose 20 times before you lost your $3K. $150 is 3 points in the ES, about 7 points in the NQ. What that means is that you'll have to be discriminating. You're looking for a trade, or perhaps several different types of trades, where you can REALISTICALLY limit your loss to $150. The other side of the equation is profit. In this setup that you find, if it's right let's say 50% of the time, then obviously the profit potential needs to be bigger than the loss potential...otherwise you won't make any dough. If the trade happened to be right 70% of the time, then perhaps your profit could be similar to your loss. You get the point.

11) Many people develop trend following type systems....in short, buy strength sell weakness. I'm against that in a day trade type mode personally. I think it's harder to set minimal stop protection when you're chasing something. I'm not saying I'm not a trend follower...because I am. But I would prefer to buy setbacks within trends for instance. Understand that there is a practical limit on a daily basis for the range of the day. Go back and look at what that is....it's higher right now than it was at one time because the volatility is higher. But there's still a practical limit. If you buy strength and sell weakness you will have chopped off a good chunk of the range...remember that. Remember also that the range is not put in a straight line. So for instance, let's say the average range at this time is 20 points. But it might do that 20 by running up 10, backing up 5, running another 10 (we're now up 15 on the day), backing up 5, then running up 10 one last time for the day (that's a total of 20). Just an example, but you get the picture. So for instance if an average intraday type of move is let's say 10 points, and it takes you 4 points to recognize it for example, and another 4 to recognize when it ends, that just leaves you 2 points! And that's if you're right! So again, to make my point, I prefer looking for opportunities where I'm buy weakness where the trend is up, or selling strength when the trend is down. How you determine trend then becomes important to your method.

11) Do some work on what I'm going to call your "self-talk". I would not be giving myself a message for example that the market is "difficult". Or that "most people have lost their money so I will too". It's kinda like a disease. You know, 80% of the people die when they get certain kinds of diseases. But that other 20% doesn't. If I were you, I'd see if I could figure out what the 20% is doing. And frankly, that 20% could give a hoot that 80% of the people lose....it just isn't a factor to them. You know, the market doesn't HAVE to be difficult unless you're consistently telling yourself it is: then I'm sure you'll lead yourself into difficult, impossible decisions. One way to do that of course for you would be to trade without a plan. Think of the market as something that ebbs and flows...your goal is get yourself into that flow. And if you don't know what the flow is, or where it's headed, then don't trade.

12) You don't get paid for trading. You get paid for being right. No one can walk into this market EVERY day and KNOW what it's going to do. But it IS possible to identify circumstance that routinely will lead to a profit. Then you simply WAIT for those circumstances to occur. That's speculation at it's highest and best. And it can occur in the day trading time frame or on a long term time frame.

Hopefully this will give you some insights. Again, don't assume because you're heart pounds that it's BAD. You're a young man. All a pounding heart should be telling you is that the game you're playing is big enough for you right now. If your heart isn't pounding, and your hands aren't sweating, maybe the game is not big enough. Whether your nervous doesn't have to effect your trading IF YOU HAVE A SOUND, VIABLE STRATEGY.

OldTrader