NoDoji's Day Trading Log

Thank you for your replies ND -

Your input is a great help to me- I hope you don't mind all the questions

Glad to see you had another successful day- have fun this wknd.

Its warming up here in Florida and I went surfing with my young son for the first day of '09- a great day

 

QT, feel free to PM me with all the questions you want. It's nice and warm in Tucson, but sadly the beach is a bit of a drive

 

What guides a trader to the next level? Someone once posted a sample of Szeven’s trades when he started out, (very small consistent profits), then jumped ahead a couple years to his post of attaining a major benchmark of $1 million on the year. The poster was pointing out that Szeven didn’t get from point A to B in a single step. Does the progress occur in small graduated steps? Or are there long periods of consolidation (steady consistency) followed by aha! moments that move one to the next level?

I invite highly successful traders to provide their input on this.

Large losses have left demons behind that still haunt my confidence. I started day trading in July and I jumped into the game with pure confidence in my strategies (paper-traded them for a couple months). I didn’t hesitate to put on a trade when the signal was there. I had a great starting month (almost $18,000 in 3 weeks), only to wipe out almost all of it in a couple days. I traded more cautiously, rebuilt confidence, only to blow it again, and again. My confidence eventually eroded, but I had no idea what else I’d do for a living. I reached the point where there was no more money for tuition, so I had to fight the demons for some time and ease my way back into the game, far more cautiously.

I know intellectually that if I trade my signals and utilize strong risk management, I will not lose. 90% of my large losses were profitable at the start and I failed to lock in profits (or, at the very least, a break-even exit). I expected the price to behave in a certain way and refused to believe it would not at some point do so until finally a breaking point was reached, far beyond any expected profit.

This is critical: None of my trades were bad trades on the front end; however, many of them were managed badly.

It occurred to me this weekend (and this was an aha! moment) that it isn’t the trades you put on that can hurt you; it’s the trades you don’t take off quickly enough. I realized that I could trade every one of my signals with a stop based on violation of my expectation and my “edge” puts the odds very strongly in my favor. I can confidently put on ANY trade that sets up for me, just as I did when I started out, and strong risk management will protect my capital.

I know all this intellectually. But just as an athlete may perfect a move by practicing it again and again, until s/he implements the move again and again in the heat of competition, there is no real progress.

I just finished Mark Douglas’ “Trading in the Zone” last week. He uses the analogy of a small child who approaches an unfriendly dog and gets bit. The child now has a core belief that says “All dogs are dangerous.” Later, the child sees other children having a blast with a friendly dog. S/he has a desire to play, too, but the core belief still drives the fear. The child sees now that all dogs are not dangerous, yet a very long time may pass before the child gets the courage to approach the group and play. The desire to play must be strong enough to overcome the core belief that all dogs are dangerous.

Now, I stand at the edge of the field watching the fearless traders who post the big numbers, and I want to play, too. Can my desire to play at the next level overcome the old demons that haunt me with irrational thoughts that prevent me from confidently taking all my strong setups, or perhaps missing entries because a setup isn’t absolutely perfect and I place unrealistic limit orders?

“Trading is intrinsically simple. Not easy, mind you. But very simple.” – Oliver Velez

 

Great stuff NoDoji, your posts are one of the few reasons I keep coming back to ET.

 

When you have been doing something a certain way and you are not getting the improvements needed to "INCREASE" your confidence to "INCREASE" your courage to take the signal than something is wrong and needs to be changed. Do yourself a favor and work on YOUR SYSTEM and do not attempt to follow anyone elses, i assure you that will lower your learning curve because you then will be depending on "YOU" and no one else. This is an individual game, always has been always will be. If you want team sports, join the local soccer team. (Just kidding, i think i heard you like soccer). Maybe these 2 articals will be good reading.

http://www.wired.com/science/discoveries/magazine/15-06/ff_mindgames

http://money.cnn.com/magazines/fortune/fortune_archive/2006/10/30/8391794/index.htm

PS: 1. Identify the setup.

2. Automatically go for it. --------------- because you watched it setup to your liking so now you finish the trade by assuming it will continue to proceed to lead to profits in said trade.

3. Win or Lose, make it a good trade.

4. Repeat steps 1 to 3 over and over.

 

<i>"I know intellectually that if I trade my signals and utilize strong risk management, I will not lose. 90% of my large losses were profitable at the start and I failed to lock in profits (or, at the very least, a break-even exit). I expected the price to behave in a certain way and refused to believe it would not at some point do so until finally a breaking point was reached, far beyond any expected profit."</i>

Yes, but there is a disconnect between intellectually and emotionally for you at this point in time. Guess which side ALWAYS wins out?

The very moment a trade goes live with real money at risk, we instinctively shift into survival mode. That may be subtle or severe, but it happens to every trader with zero exceptions. All else is tuned out while we connect our feelings to the outcome of that current, specific lone trade event.

Survival mode is where all of the mental strength shuts down and emotional weakness takes control in traders. Each of us either finds ways to manage that instinctive nature, or we perish as traders.

There are a million ways this emotion manifests. Aspiring traders commonly pay $300 to $1,000+ monthly subscriptions for tagalong, live-trade advisory rooms only to ignore or even fade the posted trade execution examples they paid for in the first place.

Traders commonly do well with x-$$ size per trade at risk, then fall apart at double that even when underlying capital is increased three times' prior. In other words, traders succeed with 100-share lots using $25,000 but fall apart during execution of 200-share lots using $75,000 capital.

*

All of that is the real learning curve for traders. Finding an edge to trade is quite simple... contrary to popular newbie belief. Bonafide edges for trade entry = execution are everywhere. It's the repeated execution of such AND especially self-management for traders that makes all difference in the world.

So I told you something you already know. I cannot tell you how to resolve your specific internal glitch for this case in point. It is something you need to examine and work on in order to have your intellectual and emotional beliefs balance out. The emotional decisions will always prevail. Always.

 

i think the key to this problem is a lack of awareness or concentration but what im talking about is maybe asking too much and it takes time to develop.

look at any object; move your eyes over it very slowly as if moving them one degree at a time. so u facing the object u are dealing with 180 degrees.

now if u can move your eyes over this object and can observe it for the whole 180 degrees without distraction then u have got it. this requires a certain type of stillness at a deep level inside you. where you are approaching this object from a point of stillness yet observing it with a (non-still) moving eye. so you are still and moving at the same time but at differrent levels and being aware of both. its like they say being in the zone which is a slightly different dimension than where we normally work from day in and day out.

somewhere it says u are so still that you are not breathing but being breathed.

in these kind of states the personality and the mind is kind of out of the way, so there are no worries just a feeling of knowingness.

hard to explain.

 

Thanks, Hog, Austin and Elit, all very helpful. Elit I understand what you are saying, as I'm in that state when using L2 to manage an exit, but I need to be that focused when waiting for setups and acting on them.

 

+ $532

Very relaxed trading today. I'm still studying GS like crazy, you wouldn't believe the paper money I made on it today

Short BKE @ 24.15 on open overbought, pullback from 24.20 high. Covered @ 23.51 on a pivot off 23.35 for a $318 gain. Never traded this one, so exited conservatively.

Short ORLY @ 32.31 approaching overbought. Offered 32.80 on a further run up, missed, lowered to .70 on next test, missed. Covered @ 32.10 bounce off oversold for a $108 gain.

ORLY stuck at that price for a while and I had an offer @ 32.30 hoping for a partial retracement, because I saw the overall trend as down. Never made it before dropping further.

Short HANS @ 36.08 overbought. Previous support target of 35.88 filled for a $100 gain.

Short HANS @ 35.82 against all my standard signals because it looked so weak and I expected a test of the day’s low. Covered @ 35.73 for a $42 gain when the L2 was printing a pattern that said big buyer on board. Perfect exit; thank you, Trader21, for your L2 coaching a while back!

 

Do you think it's normal that I secretly want you to have a bad day? Or should I see a shrink?