NQ Trades

Thank you very much, this post was just what I needed after a very discouraging day. Hopefully tomorrow will be better.

 

The pain I feel right now is overwhelming.

Trade 1 (SLD 1281 BOT 1276) This was a trade that I found via tape reading. I was looking for 1270 NDX. When it was at 78X78.5, I was looking for one last spike downward. But at 1276, that 5 point profit looked so good that I couldn't resist taking it. Needless to say, I was quite disappointed when the market proceeded to plunge to 1270.

Trade 2 (BOT 1271 SLD 1272) Shortly after I entered this trade, I realized that this wasn't going to be the bottom, but I felt that I could still get out at 1272. Why I didn't reverse I don't really know, but I guess that I felt like I had missed my chance to go short. My mind wasn't even considering shorting at this point, which should have signaled danger.

Trade 3 (BOT 1267.5 SLD 1268.5) Again the tape was still pointing lower, but I wasn't listening. After this trade, I felt my discipline slipping, and I seriously considered quitting for the day.

Trade 4 (BOT 1266 SLD 1256) I should have known right from the start that this trade was bad news. I meant to send my order as 1265, but I guess that I was in such a hurry that I wasn't paying attention. Being in a hurry to enter a trade is never a good sign. Anyway, shortly after entry the market fell down to 1261 or somewhere around there. At this point I should have been dying to get out of this trade. I can't believe that I was still looking for 1268. The market came back to 55.5X56, but I didn't get out. Then when it went below 1260 NDX, I was still trying for 1268! Around this time I had a hard time convincing myself that maybe I should just go for 1266.5. When I came back to 1265, I was trying to cheer it on for another 1.5 points. Now I was thinking that if it went back to 1263 I was definitely getting out. When it hit 1263 I got a partial fill, but then saw the momentum change back to the upward, so I quickly got back in. This was my downfall. I can excuse myself for making the other mistakes, but this one is inexcusable. After I re-entered this trade I was hooked. There was no way I was getting out now because with that re-entry, all my loss management went out the window. It made it back to 65X65.5. Then the bottom fell out. It briefly occurred to me that I should exit at 1262, but obviously I didn't because I was a man possessed. At 1260 I knew that it was going lower and that I should just get out at breakeven for the day. Sadly, I just didn't care anymore. With all the mistakes I made with this trade, this apathetic attitude bothers me the most. I knew I was beat, but I was just too stubborn to admit it. When the loss totaled 10 points, I finally admitted defeat. I think that there were at least 10 mistakes that I made with this trade, but only the re-entry and apathetic attitude really bother me.

Hopefully someone can learn from my mistakes on Trade 4. I'd be lying if I said this was the first time this has happened. The first time it happened was in March 2002, and its happened 7 times since then. Here is the pattern.

1. It begins with a day where I miss or mess up a great opportunity.
2. Then I feel entitled to what I missed which of course leads to a massive losing trade which is always contrary to the tape even at the point of entry (the reason that it is contrary to the tape is because subconsciously I want the market to return to my missed entry point so that I can have a redo on the trade that I missed).
3. There is always one opportunity to get out around breakeven or at a small loss.
4. I usually get out but then immediately get back in. At this point there is no longer any hope because I am hooked.
5. If by chance I am able to get out at my profit target, the cycle restarts at step 2, although it may be delayed a few days.
6. Then, I hold this losing trade overnight.
7. The next day the loss becomes more than I can bear, and I get out.
8. Then over the course of the next week or two, I depart from my system and become some sort of reckless gambler trying to get back what I lost.
9. When the loss has become approximately twice the original loss, I come to my senses.
10. I take enough time off to get over what happened and to deal with the issues.

That is the cycle of my achilles heel. I've never admitted it to anyone before, because I thought that I had it under control. I now admit that it is a problem beyond my current ability to control it. It is what makes me a good trader instead of a great trader. I have conquered step 6 which in turn has stopped step 7. They are no longer an issue anymore. I should note that it is impossible to overcome step 1, that is just something I will have to learn to live with. I also thought that I had conquered step 8 which in turn solved step 9. However, the last time this happened was the drawdown that prompted me to start this journal, in which case I did go through steps 8 and 9. The main reason I am going into this in my journal is because I want to conquer this problem once and for all. I used to think that I would never be able to overcome step 2 because it was a personality flaw. However, I now know how to solve step 2; I need to take some time off after step 1 in order to deal with step 1. I know that that will work. The only reason steps 3, 4, 5 (especially 4) occur is because of step 2. So really, step 2 is the fatal flaw. I have overcome step 6, and I can easily overcome step 8. Those just compounded the problem created by step 2. Also, I think that once I have identified that I am in the cycle I can stop it at anytime by skipping to step 10. Usually I am able to identify that I am in the cycle after step 4 at the latest. Unfortunately, this is also the absolute hardest place to stop. I still have enough control to stop myself from getting back in. But after I re-enter, I am no longer in control of the situation. Believe it or not, step 5 is the worst possible thing that could happen.

Looking forward, I know exactly what I need to do and I will do it. Even though I believe that I have control over step 8, I am going straight to step 10. I will take Friday off. Thankfully the weekend will give me more time for the healing process. If I still need Monday off, I'll take it. I'm also thankful that I had a profit cushion going into Trade 4, and that I'm still up a somewhat respectable amount for the week. I was planning on increasing my size to 10 on Monday, but I will now take at least another two weeks at 8. Please refrain from offering advice. It's hard enough for me to post this, I don't want to hear what everyone thinks about it. Thank you for your understanding. Right about now, hitting "Submit Reply" is almost as difficult as taking that loss on Trade 4. It's not quite as painful though.

 

There's quite a bit to talk about today.

Late last night, after I had a chance to cool down, I was thinking about what happened. I was really mad at myself, because at this point I am too good a trader to voluntarily let that kind of stuff happen. I was thinking about the times that this has happened in the past, and tried to draw some similiarities. I realized that there was a predictable course of events. So predictable in fact that I was able to use my known psychological responses as a technical indicator. I don't want to go into details too much, but I was looking for a psychological inflection point on the chart, one that occurred at the moment I became apathetic; this was 1260. Actually, historically this inflection point has also been the moment of my one last chance to get out; this was 1265. Then I took the moment the whole cycle started; this was 1281. The inflection point is the halfway point of the move against me, so based on this, the market was headed to 1239-1249 before it would touch the inflection point again. I wasn't about to try trading off of this theory though. It was just an experiment.

I was tossing and turning all night. Then I woke up in middle of the night and shut my alarm clock off. I then had the following dream. I was watching myself in the future. I was still trading with IB, but it wasn't called that anymore. There was a really futuristic interface that appeared to be quite complex. It seemed like dynamic colors played an important role, although I'm not sure what that was. There was no longer a distinction between NQ and NDX, they were one and the same. Also, there were several additional components that were trading in correlation to the main contract, but I didn't know what they were or what they did. Anyway, here I was at the start of the trading day. The market was down slightly over 40 points; at its worst I think it was down 47. Anyway, my character sees something he likes, and goes long at 1245.5 (I think it was 1245.5, all I'm certain about is that the last digits were 45.5). The market instantly goes against him 1.5 points to XX44. What was his response? He said, "Oh well, it's still a good trade. I'll just hold until the close." Then he turned the monitor off and walked away. I was like, "What!? That's gambling!" At this point I woke up.

When I turned on my monitor, I saw that the market was at 1240 NDX. The tape was still pointing down, but I could tell that it was exhausted. I should have waited for an entry signal, but with the combination of my psychotech analysis and my dream, I had to go long. I do not consider this gambling, because the tape did signal a reversal was near.

Trade 1 (BOT 1240.5 SLD 1246.5) I wanted 1240, but I got 1240.5. Then the market went against me. I was using 1240 for trade management, and my mental stop point was at 1238. It went to 38X38.5 and just as I was about to bail, I received a buy signal from my system. Therefore, I decided to give it 1 more point of wiggle room. It proceeded to come back up, and I almost bailed at 1243.5, but I thought it would at least make it back to 1245 NDX so I moved my stop point to 1241. When it hit 1245, I realized that if I could get 1246.5 I would have achieved my profit goal for the week. I was very content with this trade, and I then went on with the rest of my day (not trading).

Trade 2 (SLD 1265 BOT 1264) I checked in to see how the market was doing right before I went out to lunch. I was shocked to see that it had come back to my inflection point. There was only one other time that this had happened, August 2002 (I'll talk about that later). More importantly, I wasn't upset at all that I had missed out on an additional 20 points. Step 2 didn't trigger at all! For the first time, I was content with what I had. Anyway, I saw a quick scalping opportunity which I took. I realized that this wasn't the top, so I got out at 1264. It never occurred to me to reverse.

Trade 3 (SLD 1267 BOT 1266.5) Before I entered this trade, I thought I had found the top for the day. Soon after I entered, I realized the market was going even higher. I was dying to get out of this one! I just hit the ask and went to lunch.

Trade 4 (SLD 1275 BOT 1274.5) This was another scalping trade. I was looking for 1273. I was impatient on my entry, but I was afraid I was going to miss the trade. It went to 76.5X77 after entry, and I was prepared to exit at 1277 but thankfully I didn't have to. It came back to 74.5X75, and I was now convinced that this was a good trade. But then it went back to 76X76.5 and I lost my patience. I still knew it was a good trade, but I was going to get out if it went below 1275 and looked like it was going to come up again. It made it to 73.5X74, at which point the market action looked very favorable, and I changed my target to 1272. It went to 74X74.5, and when it looked like it was about to go through 1274.5, I got out. I'm actually not upset with how this trade turned out. Messing up entries makes me very cautious and subsequently impatient.

The observant may notice that today was virtually an exact repeat of yesterday. I found a good setup via tape reading. I got in, and got a nice quick profit. Then the market went at least 20 points further than where I got out. The difference today was that I didn't get mad about it. It didn't bother me that I missed so much more profit. I was just happy with what I had. For the first time, I was content. Not only did I conquer step 8, I also conquered step 2. One thing that helped was I realized that at this point in my trading career, there isn't any obstacle that I can't overcome. The only thing that can stop me from succeeding is myself. It's a good feeling.

The other thing that I realized is that I think that my tape reading skills are now better than my system. I'm not sure what to do about this yet. I think that I will probably continue to use my system with tape reading for confirmation. Then I will start to use tape reading with my system for confirmation until I can gradually move into pure tape reading. Nevertheless, I'm not ready to start this process at the moment. There are too many other issues that have first priority.

I said that I would talk about August 2002. The market action happened almost exactly the same. I held overnight. The next day, it went even further down. At the bottom, I couldn't bear it anymore, so I got out. I didn't just get out, I went short (reversed). Over the course of the rest of the day, the market proceeded to move up to exceed the previous day's high. Before this happened, I did manage to reverse again at the halfway point at about half my original size, but the damage was done. Then over the course of the next few days, the market went on to my original profit target. This was the worst of all the times that it happened. It was also the only time (other than today) that the market came back to the inflection point (let alone the starting point!) of the cycle during the next day. It was also the only time that I've done a capitulation reversal (I learned my lesson on that one).

I know that I said that I wouldn't trade today. I also said that I would postpone increasing my size to 10. But when I woke up this morning, I had faith in myself to overcome obstacles. I'm glad that I did.

 

AFterburner,

Be careful, you could be reinforcing bad discipline habits when you say one thing and do something else that results in a profit.

Simply...I wish you hadn't traded today nor bumped up your size after saying you wouldn't.

Just my opinion.

NihabaAshi

 

True. However, at the time of my post I hadn't had sufficient time to be able to make a sound judgement on the situation. I think that in stressful emotional situations people often say things or draw conclusions that they later realize may have been incorrect. I understood the positive and negative consequences of both courses of action, yet I chose the path that I felt would be the most productive. Look at what I accomplished today. A lot went on that maybe didn't come through in my writing. Today was a very good day, and it didn't have anything to being profitable. Profit has very little to do with how I classify a day. I've had great days that ended with a loss and terrible days in which I made a profit. I just try to concentrate on the trading and let the money take care of itself. The only time that a profit can reinforce bad discipline is on a bad trade (step 5). As far as trades are concerned, nothing today falls into that category.

 

You fought the trend all the way up, this is not good. Although, you were able to pull points out of the noise, this type of trading in the Long run will prove unprofitable, moreover, you'll never be positioned mentally to pull out 7-10+ pt. winners out of a market like this.


When "True Direction" is staring you in the face, just don't fight it.
If you find yourself saying I just think that the move has gone to far without me, that if I get in now I won't make anything.
This is fear speaking to you, don't listen to it. Take a look at your charts and look to the most unrealistic place that market could go in your mind. If its another 20pts. higher than where you are currently and market has just cycled thru only 2 maybe even 3 Stoch/RSI oscillations wait for the next pullback and jump on.
Take into consideration the time of day, this also helps.

You don't want to have this kind of thinking when market has moved from 1240 on the Nq e-minis to 1280 then think, "HELL Yeah, we're going up..uP..UP!" - -This is a bull lemming going to the slaughter most of the time.

Anyway, I think you get the picture.



best-

momo

 

if you don't have a system, or discipline
it is just gambling

 

I agree that this is still one area that I need to work on. I tend to be a very logical person, and even though my gut knows the market is going higher, my brain doesn't want to let me participate. I still have enough sense not to hold these types of countertrend scalps very long (both countertrend scalps lasted only about 35 seconds). The third trade (Trade 4) was actually a good trade, but I still didn't want to give it any chance to get away from me. Nevertheless, I was playing with fire and I admit it. Hopefully this is another problem that I will be able to conquer over the course of this journal.

 

Wrong. You made some bad choices and some bad trades. The fact that you ignored discipline and that you consider this to be a good day just compounds the problem.

Nothing that has been said here needs to be said again. I suggest you start at the beginning of the thread and study the responses to your posts. If you could study your posts as if someone else had written them, you might find the experience enlightening.