Birth of a trader

Something strange happened to me today, and I’m treating it as a wakeup call. I decided I wanted to play on the CL Redux forum, since that’s what I trade. After my order was filled, I tabbed over to the forum and started to enter my trade. I typed in the entry and stop, and just as I was about to hit the send key, I felt – panic! I couldn’t believe it!! I was actually terrified of sharing my trade entry. All kinds of juvenile thoughts like, what if they say it was a stupid trade, or what the heck did you do that for, or even – gulp – what if I’m wrong and everyone sees it.

This was so startling to me, I took a step back to think about it. What do I care what a bunch of people I’ve never met or will ever meet think about this trade, or me for that matter. Really. It didn’t make any sense, yet the fear was real. After a deep breathe, I submitted the post.

A few minutes later, the trade wasn’t going as planned and an opposite signal appeared, so I got out of that trade with a couple of ticks and changed direction. Now just the thought of posting those two trades brought feelings of panic. They’re going to say I’m over trading, or trading like a rookie (I am, BTW), or make up your mind, or what ever. I couldn’t bring myself to post that next trade. Jeez.

So what I’m going to try to do is post my journal. I keep a real time, on line journal with all my trades, goals, thoughts, etc, and I’m going to try and grow a couple of testicles and post it at the end of the day.

The irony of this is for my first post on the forum, I smugly asked advice on taking my trading to the next level. Right after that post, I had a string of losers and was suffering a minor crisis of faith. After days of paper trading and pouring over charts, I was feeling better and wanted to play with the oil traders.

Well, I don’t know if I’ll be posting to CL Redux in the near future, because I first need to get over the fear of airing my dirty laundry.

Let the healing begin…

 

Hi Frank, I think these feeling stem from the perceived threat to your ego

"Ego is your self image. It is how you see yourself in relation to others and the world. Ego also includes the compulsion we feel to defend the image. The ego is not real. It is a concept, an idea. We have these thoughts and urges within us and we call it "ego". For something that is not real, the ego certainly gives us a lot of problems. The ego's role is to form and to protect the images you have of yourself. If you think you are a "good trader", then you will fight to protect that image whenever it seems threatened. If someone criticizes you, you will feel defensive. Your defensiveness will have you withdrawing or attacking, neither of which are healthy responses. The ego feels threat and reacts with fear. Whenever you feel threatened or fearful, your ego is in charge."

Most on ET don't understand this concept and how it affects their trading (or dominates their life ). Check out this thread.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=204587

 

If it hadn't happened to me, I wouldn't have believed it. Thanks for the thread. Got some work to do.

 

if you hadn't been honest you would never know.

you are on your way to becoming an enlightened trader, and remember - there is no spoon.

 

The year started off great, but July was very slow and choppy. August has been even worse, so last week I decided to go back to paper trading, and have had minimal success. I'm starting to feel like I'm at the very beginning, but today I'm going to get back in to it. The goal is to trade like a professional, and not let these past tow dismal months cause me to trade angry or foolishly. I'm going to wait for my signals and take them if they appear. The only difference is going to be the stop. I'll set that at 15 ticks with a 20 tick target.

• 06:08 - Oil opens with a big 60 tick spike up. No news that I can see.
• 07:15 - Losing my nerve. Switching to paper.
• 07:24 - Been watching signal after signal go by without pulling the trigger. Had sell signal 07:18, but it was against the trend so I sat on it. Decided to take it and watched as stochastics started to move against me. Moved stop to BE+1 and was taken out.
• 07:32 - Again I waited too long for this trade after the signal. Entered late and didn't get the expected move, so moved stop to BE+4 and was taken out.
  07:36 - Trend seemed to be turning down and got sell signal and took it right away. 20 tick target hit with a bonus 1 tick of slip.
  

What I did right:

• Monitored the trades and bailed out when they seemed to be going against me.

What I did wrong:

• Ignored too many trade signals, even though I was trading in sim! I think my intent to post these trades has caused me to act differently than I normally do.
• Got involved in other activity while trading and lost focus. Need to keep my head in the game.

Day Total - 46 ticks in sim

 

Traded like a chump today. Started watching oil at 05:30 PST and sat on my hands as it ripped up through 160 ticks over the following 2 1/2 hours. There were 2 news events the drove a lot of the surge. There were several signals that I ignored because I was reluctant to jump on a run away train.

08:05 - With frustration mounting, I took a short signal at 74.28 that was clearly against the trend, but my logic was Newtonian (what goes up must come down). I got a few ticks to the good, but after 6 minutes when price didn't do as I was expecting, I moved my stop to BE +3 and was taken out 3 bars before a 40 tick run in my favor. Dang. Since I'm mainly scalping, my plan calls for a reevaluation of the trade after 5 minutes.

08:40 - Price had fallen below the 20 EMA from the previous move, and after a small price rise, I got another sell signal right at the 20 EMA which I took. This immediately reversed and stopped me out. I'm OK with this trade since I took my signal without hesitation. Here comes the bad part...

08:45 - The reversal that took me out on the previous trade had generated a buy signal, but I was already short. Instead of reversing my position, or better yet, going flat, I let it take me out and then entered long even though the price was higher than what the signal called for. Still got a few ticks to the good, but this was the start of choppy price consolidation, and I moved my stop up to BE-4 and was taken out with 1 tick of slip.

Lost 17 ticks today, but it's not the money (heck, I don't know, maybe it is). It's the good trades I passed up, then letting frustration mount, I took trades that weren't the best possible.

Tomorrow is another day.

 

This really only needs to be said once.

Don't trade off the 1 minute chart. A big reason why you're getting whipped around is because of the 1 minute chart. At least consider it if you're just going to be stuck in your 1 minute ways "because 5 minute charts are so boring to watch."

Look at the 5 minute chart and see if you still get your signals and remember that "5 minute bars take 5 minutes."

 

I think getting whipped around happens on any time frame. I'm trying to be aware of when the market starts to move side ways and the bars become barbed wire. Unfortunately for me, when I finally decided to start trading, I had missed the better trades. What I'm trying to teach myself is to take every trade and let the chips fall where they may. Every day I go back through the trading day and compile statistics on what would happen had I done that. My brain says, 'Take the trade'. The signal is getting lost before it gets to my fingers.

When volume is good, I don't see any difference between the time frames. I don't trade when volume dips below 300 contracts per minute. My account is only 20k, and I don't feel comfortable trading 5 minute bars because of the higher stops required. Eventually I'd like to expand my time frame, but not yet.

 

Burning down the house. I've decided to rework my trading plan and focus on a different approach. For the next couple of months, I'm going to hammer out a new plan based upon the stochastic indicator and the 20 ema line. No other indicators will be used or considered. Eventually, I'd like to understand price and volume well enough to trade without the need for any indicators, but first things first.

I'll trade the 5 minute chart (up from the 2 minute), but take the trade direction primarily from the 15 minute chart.

This longer time frame will expose me to more risk, so I'll need to optimize my targets and stops. This will have to come from sim time, chart reviews and experimentation. Previously, after recording many hundreds of trades in my database I had found that a 13 tick target and 10 tick stop worked well, and I was trading with about a 60% accuracy. With making 1 - 3 trades a day, you can see I'm not getting rich here.

As a first pass, I'll go with a 20 tick target and 15 tick stop for directional plays, and an 8 tick target and 10 ticks stop for scalps. The market will be oil futures only.

The signals

Scalps - will be an against the trend trade and be taken when the 15 minute chart is extended beyond the 20 ema, prints at least 2 flat, equal bars, and the 5 minute chart stochastic lines give a signal coming from beyond the 80/20 line.

Directional Plays - will be based on the trending direction of the 15 minute chart. Entry will be when the 5 minute chart has retraced to the 20 ema and the stochastic lines indicate the trade in the proper direction.

Candles - will take any shooting star or hammer at the extreme of a move on the 5 minute chart, provided it occurred on high volume and the next candle closes in the proper direction to confirm. Entry will be made on the bar after the confirmation candle.

Money management rules will be temporarily suspended, however the trades will be uploaded into a program that keeps a running P & L so I can see after the fact if I would have ceased trading for the day based upon hitting either a daily loss limit or a daily profit limit.

There are other rules from my previous plan that are applicable (times of day, news events, low volume, etc), but I'll leave them off.

I realize this is simplistic, but I feel I need to strip off all the indicator crap and start naked with something. I'll modify these in the weeks to come.

 

Frank, as the creator of CL Redux thread, allow me to chime in by saying that folks who congregate in that thread are pretty laid back and, might I add, even helpful. We all go out of our ways to help each other out. We point out one's strength as well as weakness. Nobody looks down on you for having losers. So I encourage you to give another try.

Be that as it may, I specifically laid out a few code of conducts on the first page, of which flaming and outright condescension are strictly forbidden. Should you run into any of these problems, let me know.

BTW you obviously haven't met a real flipper yet.