Matcha's Dow E-mini Journal

Hi LuckyLucy,

Thank you very much for your support. Yes, you are right. The emotion of fear is detrimental to a trader's success. I know I am also capable of doing some "crazy" things after a big loss day which will lead to another big loss.

I wish we all can kick those "not very good habit".

--po

 

Matcha:

I have seen you posted only the 1-minute intraday charts for YM on each day. I am not sure if you look at the higher time-frame for analysis. Here are my suggestions for you to think about.

1. Forget the notion of Al Brook's "bar by bar" analysis on a 1-minute chart. I know you are Brook's fan. But I truly think "bar by bar" is not to be applied to low time-frames. Daily charts, good. May be hourly. 15 min.

2. Start you day and continue on your day with looking at bigger swings with 15-min charts (something like that). Look at the bigger swings and more major price pivot highs and lows to trade, instead of the Al Brook's H1 or H2 or something like that.

3. Just an example, I did some scribbles on a YM 15-min charts as on 2/9/11. 3 thoughts.

4. Recommend to read Dr. Alexander Elder's book "Trading For A Living"

http://www.amazon.com/Trading-Living-Psychology-Tactics-Management/dp/0471592242

He has a very-well written chapter describing that: price generally bounces between a range. Then when broken from that range, price runs rapidly to another level, then establishes a new range. And the process continues.

Greg Capra from Pristine calls this a "VOID". Prices move THROUGH the VOID very quickly.

The "Fluid" motion. All same concept.

Match that notion and see they can be validated on the chart for your analysis.

 

From the Patient Operator

" Lesson learned- I don't even know if I am ever going to learn - "

This is the most honest comment that could be made and needs to be made. If you are ever going to succeed, you need to move away from the politically correct approach and get down to the basics.
The next thing is to stop patting each other on the back. It is a false sense of self-reinforcement.
I will say it once again. Strip everything else from your chart and find that one moving average that suits your personality and, subsequently, your objective and find the time frame that works in complement with that moving average. Then watch the price action and learn from what it is telling you with respect to the average. The quicker you 'unlearn' your self, the quicker you will recognize what is unfolding in front of you. In the process, you will create your own setup, according to your own observations. Forget anything else that may have already distorted your approach. The proof is in the fact that it is not working. If you are not prepared to spend the time understanding what you are watching, based on your own perspective, then you might as well give it up now. If you insist on becoming a success but are unwilling to change, in the belief that some new guru or book method has the answer/shortcut, it will impede any progress ( if any) by a significant multiple of years.
You are not going to find any better straightforward encouragement than what is being offered.
I could walk you down that road by hand, but it would be a meaningless experience for yourselves.
Cheers.

 

I think there are ups and downs in the trading career that we have to get used to. Be prepared for that. Especially during first years of learning. Our inexperience will cause us a few losing days, max. losing days in a row. We will have great days in a row then only to give all it back in one day. We just need to learn from it! Got to be tough to handle all that. And do our best to minimize the risk and protect capital.

Market will always be there every morning. But our account will disappear if we reinforce bad habit. Then we really just end up "just watching it go" everyday.

As far as "don't let you winner's run". My plan is still taking 20Pts for YM(only to trail when trend is super strong) and only take one setup. I think by doing this, I will narrow down my research and analysis to one then be an expert on it. I really think at this point we need to work "smart". I will say go back and study more on all the good trades and bad trades, trading time is also important, why they work and not work. If we did nothing wrong, then market just reversed on the trade, so we shouldn't be so hard on ourself. Its just the 50% of chance that trade doesnt work. Do the Max factor analysis. The other thing is what is your stop usually is at? 2 pts/? is your trade at least at 1:2 R:R?

Then just increase lot size. I know we can't think about money in trading. But it will be nice to have some money in the account every month.

 

HI, Sifu!
Glad to see you here again. Thanks for your chart and reminding me of using multiple time frame

Chart I post everyday is the 5 min. I took setup from there. I only trade pullback now.
I have been watching 15 and 60 min but not that often in trading hours. I do mark all the S/R level and trendling on larger time frame and reference to 5 min.--to "pay attention to bigger swings and turning points on 5 min". But if I were to take those bigger swings, it will be a bottom .top picking on 5 min chart. That's why I choose to take pullback trades on 5min to get a more High prob. trades. For now it's simpler for me. By doing that of course minimized my profit. but it's OK. Let me do some more practice on that.

But I have to admit I sometimes do get confused a bit by mutilple time frames. Need to work on that a little more.

Btw, the void concept is my favorite piece from Greg Capra!

 

Hi, xroad. Thanks for your honesty and being straightforward.
I am not sure if this comment is directed to me or PO or all the new traders. But I think PO does have his own method that he is working on.

I agree with you that no one can walk anyone down to that road. Everyone has their own personalities to trade and apply any method they might decided to use or "rework". Market is a complex beast. Everyone sees and understands the market differently. So no one can 100% copy and adapt a "so-called magical method". That's why we hungry newbies have been working on so hard to understand the market, understand the setup and build our trading plan around the setup which suitable for us. New traders who want to copy and don't do their own home work will fail quickly. I believe we are in the stage 2-working on our own edge.

Since you brought this toppic, let me add that I know I mentioned a lot on Al's method in this thread from last Nov. But I have to clarify something that there are some of the techiniques are just not working for me to trade. So I am testing and reworking the system for myself. But I am really open-minded to any ones ideas on reading the market, that's why I continued this thread to help me learn.

Again, I like your idea of stripping everything down and go back to basic.

As far as patting each other's back, we like to keep postivie spirit going in the thread! But I did a lot of critiques from PO and other traders through PM

 

Hi XRoads,

Thank you very much for your assessment on our trading progress. I will take your advice and re-evaluate my trading strategies. I will seriously CHANGE what has not been working for me. I once heard from someone who is wise said, "do the same thing over and over again and expecting different result is the definition of insanity". I don't want to go down that path. Ultimately, the method that work for me is my holy grail. I cannot borrow it from someone else.

--po

 

Hi Matcha,

Thank you very much.

I like what you said: "Market will always be there every morning. But our account will disappear if we reinforce bad habit."

I have been reviewing and analyzing both my "good" trades and "bad" trades. I am beginning to see a pattern of going down the path of making the same mistakes again and again and "hoping" the market will change. But, the one who should change is me. Like I said in my earlier post, if I don't change those misguided habits, I don't belong to this trading business (Mr. Market will "fire" me in no time. )

My stops average to about ES 1.5 pts initially. I used to set it at 2.0 pts. My target is 2.50~3.0 pts. The r:r is slightly under 2.0. That's the goal. But I am still behind the curve.

If your plan is to take 20 YM pts and your r:r is 1:2, does that mean your average stop loss is less than 10 pts?

I love the positive spirits going in this thread.

--po

 

With regards to stops, targets and risk/reward ratios...don't waste your time even thinking about them when you have not even identified a setp that makes sense. Work on the rationale behind your setup, and the hard stop will be known and the exit point will not necessarily be constrained by a target and definitely NOT by a useless trailing stop. Recognize from your posts that you are putting the cart before the horse...
The reason for failure is the incompatibility of applying human psychology to understand the market action. The task is to learn and ACCEPT the psychology of the price action. The eureka moment will occur when you realize that it has been staring at you all the time and all it took was to forget all the stuff that has already polluted your thinking.
Be forewarned that the learning process will cause/necessitate a disruption in one's psychology that will be at odds with what has passed before it.

 

Greetings Xroads,

That’s an interesting observation that you’ve made regarding the Setup. And in a sense, I partially agree with some of the things you’ve stated. But, when you use the term Setup, I’m assuming that you mean;(The component part of an Edge, specifying the parameters for defining a trade opportunity). And along with the Setup of course, this would include; entry, stops, targets, and R3. In essence, the Setup is the execution component of an edge. If this is what you meant in your use of the word "Setup", then I have a question for you.

My question is; Most neophytes do not possess a viable edge at the start of their trading. How then is the neophyte supposed to find a Setup that makes sense, in order to validate the efficacy of their “proposed” edge, without at the same time, having the freedom to "make mistakes" testing the Setup parameters within that edge? Its a bit like a “Catch 22”.

In other words, how do you learn what the “right” Setup parameters are for you, until you experience “your truth” for yourself? And how do you go through the experience process, without the freedom to “make mistakes”, in order to learn the things that make better sense? And, as you know, the automated backtesting of a “Discretionary Setup” is problematic in this case. Because, as it is a discretionary method, as such, any particular trade may or may not have to be executed.

In earlier years of my trading, I was never quite able to directly use some of the “off the shelf” Edges created by someone else. I personally needed to first “test” and “fit” the method to match my particular set of circumstances (financial, technical, personal, and otherwise). Some things just never seemed to fit because of, as you very perceptively stated; “the incompatibility of applying human psychology to understand the market action”. Back then, I never really understood the absolute importance of the “right mindset” for trading, as I do today. But even in the chaos, I always did seem to pick up bits and pieces along the way that did “resonate with my truth” at the time.

Whether in time, these things were eventually proven right or wrong, or good or bad, was another matter. But I would have never known this, had I not been able to find and discover truth for myself. So for me, this inevitably involved traveling down many blind alleys, and doing things that were eventually found not to “make sense”. And in my eyes, in the final analysis I have come to believe this:

“Up until the very day you do cross over the threshold into consistent profitability, your proverbial Cart will always be in Front of your Horse, so to speak”.

I believe it’s a natural and essential part of the development “process”. I’m not exactly sure what you meant in your “cart before the horse” words. And if I’m way off base, I do apologize, but please let me know where I strayed in my understanding. I am interested in learning your thoughts on this topic, as I am a firm believer in the idea of “constant and never ending improvement” (Kaizen).

My particular road was long and rough, filled with extremes of both pain and pleasure. And a somewhat kinder and gentler journey continues to this day. And thankfully, in the course of "experiencing" this process, I did eventually learn where the damn horse was supposed to go!

And I believe that,…..in her own good way, Matcha is doing the same.

Thanks for listening, and best wishes to both you,...and to her,.....on your own personal journeys!