I've been looking for a place to gather my thoughts on trading, and a journal seems to be as good as place as any. Although this journal is mainly for my own record, I'll provide some details about myself in case anyone decides to follow it. I'm a 28 year old guy from chicago. Like a lot of people on ET, I "gave it all up" to see if I could be a trading success. Well, officially, I left my job as a computer consultant with IBM to pursue a masters degree in financial markets. But, unofficially to dedicate my efforts into seeing if I have what it takes to make it as a professional trader. I began pursuing my degree and learning about the trading world in September of 2004. Over Christmas break, I made my side project getting my computer set up with all the tools I need for trading practice: Specifically eSignal and X_Trader TT Trainer. With those accomplishments under my belt, I kicked off the new year with a plan to start learning to trade successfully. I spent a week day trading ER2 contracts, trying to take 0-4 positions per day. One week under my belt, and I only have one thing to say: Wow, did I get an ass whooping this week ! I first posted a few weeks back, and had some interesting responses to my endeavor: ---------------------------------------------------------------------------------- "PS If you learned how to trade from your iit courses WTF do you need someone else for? Just trade your own money and keep 100% of your profits. There lies the problem with claiming you know how to trade....PS you realize that 90% of traders fail ?" --5yrtrader "Unless you trade and can prove you can trade then you might as well read a book on medical research and then see who will hire you as a 'doctor'. --TorontoTrader2 ---------------------------------------------------------------------------------- After only one week of doing this, I can see just what these guys are talking about. Its funny. Like most newbies, I've read a lot of the books out there. The one that comes to mind for me is "Trading for a Living". The author points out how difficult trading can be. However, I think almost everyone who reads that book for the first time comes out of it thinking he has what it takes to beat the game. A little knowledge can be a very, very dangerous thing...especially to your bank account ! So, one week later, what have I learned ? 1) Had I started trading with actual cash, I might as well have just taken a lighter to my wallet. Fortunately, I belive that I am getting into this business for the first time in history where one can practice trading in an environment that is very close to the real thing, without a risk of damaging my account. This is a very, very good thing. 2) Knowing when not to trade is just as important as knowing when to to trade. Probably more important. I had some decent profitability a couple point in the week. Then, dummy over here gave it all back and then some on less than optimal trades. Every book in the world cautions you against this, yet when you're sitting in front of the trading screen, its more difficult than it sounds ! 3) I belive that developing a trading style that both is profitable and fits your personality is key. There are a lot of systems out there that people will sell you. However, I'm of the opinion right now that best approach is to sit down and think about what would work for you. Of course, my opinions on this may change if I go a year losing every month in a row. As for me, it looks like its time to go back to the drawing board to start developing a workable trading methodology. -Tony
Care to comment on what kinds of trades you perceived you were making? Any chance that the lower liquidity of ER2 vs. NQ or ES was a factor?
Well, it was bound to happen eventually. After my first 7 trading days, I logged out of TT Sim with more money in my pocket than I went in with. After broker fees, I was actually up $9.40. Better not spend it all in one place. I just wish I started this sooner. I've spent the last several years reading trading books...however, nothing truely prepares you for that day you start doing it for real !
I commend you on not trading real money in the beginning. People will tell you that paper trading is useless. Dont believe it. Using market orders with a good simulator will at least give you an idea what youre getting into.
My thoughts exactly. Succeeding in the simulator is no gaurantee you'll make it in the real market. However, failure in the simulator is a damn good sign you're not ready for the big time yet. I'm still having quite a few of those "what the hell was I thinking?!?" trades.
I certainly feel like a big dummy anyways. Today I lost $640 in trading losses plus another $220 in broker fees. I'm supposedly doing macro day trading where I'll take a few positions per day based on trend changes. YET I MANAGED TO MAKE 38 ROUNDTRIPS TODAY !!!. Instead of just using my one minute chart for timing, I started trading off of it. Instead of taking a position, setting my stop and waiting for confirmation, I kept micromanaging trades. BAD TONY ! The three highlights of my day of trading the ER2: 1) I called the 9:55 AM bottom correctly, yet screwed up the execution of the trades to take advantage of it. 2) I called the 10:55 AM top correctly and screwed up execution as well. 3) At 1:04PM, I was down $880 total. I decided I was trading on tilt and took myself out of play for the day. I didn't even make it through the day to see the beautiful rally at 2:30PM. Lessons Learned: 1) I DON'T NEED TO SWING AT EVERY PITCH. 2) I need to make a call on the market, put on a trade, set my stops, and then wait for the market to prove me right or wrong. I NEED TO SIT ON MY HANDS ONCE THE TRADE IS ON !!!!
I don't quite know what to say about a trading day like this. I lost money, traded well up until the last hour and mixed signals & a twitchy finger cost me a gi-normous payoff. Obviously no likes to lose money. But thats secondary right now. I had a few really good trades which made me happy. But if I didnt make one mistake, I could have been profitable. And that is frustrating to no end. After yesterdays trading debacle, I had my technical analysis class in the evening. The class is being taught from Murphy's TA book. I've read it before, but it was good to refresh some old ideas. My early trading had just been utilizing trendlines & support and resistance. After class, I decided to enhance my system using moving average crossovers. Backtested against the daily data I had and fared pretty well. Decided to try it out in TT Sim today. ER2 started out in a huge (300 point) trading range which wreaked havoc on my trend following system. By 11:15 AM, I was $1500 in the hole. Fortunately, the market got back to trending, and I had a couple really good trades. Got in and out of the 11:15-12:15 and 12:45-1:30 uptrends at exactly the right times and prices. Both great trades. Got into the downtrend that ended the day at 1:45, going short 2 at 61620. Market looked like it double bottomed at 2:05, so I covered one of my shorts and left the other on to see if I could make some more. And I fricken got faked out. Although my moving average did not give a signal to close, I had a trendline violation in addition to a higher high and higher low being made. I closed out at 61560 Market went on to make a spectacular drop. By the time all was said and done, several buying opportunities presented themself at 60920. All in all, its hard to complain about a day like this. Sure, I lost money early on, buy only because the market was in the worst possible state for a trend following system. Through good trading, I managed to close a $1500 loss to a $450 loss. I dont fault myself for closing one of the two short contracts. When a change of trend just begins, I like to open a few contracts and sell them off at opportune times as the trend progressed. However, in acting on conflicting signals, I missed an opportunity which would have yielded $650-$720 in profits depending on where I closed out. Would have turned a losing day into a winning day. Lesson learned from the day is its OK to open a position by a few contracts when the new trend starts. Its also OK to take profits when opportunities present themself. But I should always leave one contract open until I get a clear signal the trend has reversed. Otherwise, I'm missing out on the opportunity for superior rewards.
Going into week 3 of my simulated trading. To date, all have my trading has been based off of technical analysis indicators. I've tried many indicators in all sorts of time frames. Havent had much good luck with this approach. This week, I think I'm going to experiment with a new style. I'm turning off my technical indicators and turning on a time and sales window. Just about everyone from the protaganist in "Reminiscenes of a Stock Operator" to members of the ET community have touted the benefits of being able to "Read the Tape". I'm going to give it a shot myself and see if I too can get in tune with the flow of the market.
The following is from "The New Market Wizards". Jack Schwager is interviewing a trader named Monroe Trout: ************************************************ Jack: You were fresh out of school. How did you learn to become a scalper overnight ? Monroe: You ask a lot of questions. You stand in the pit and talk to the people around you. It's actually a great place to learn quickly. At some point, you hit a plateau. But when you first get into the business, its a great place to start, because there are hundreds of traders. If you find the ones who know something about the markets and are willing to talk to you about it, you can learn quickly. ************************************************ When I decided trading was what I wanted to do with my life, I actually tried getting a runner job at the CBOT just to tap into the flow of information mentioned above. However, even with some contacts in the business, I couldnt get in given the downturn in pit trading. Fortunately, in lieu of having pit traders to talk to, many electronic traders on this board have been very helpful to both me and other new traders on here. Just officially wanted to give props where they are due. ET has a great user community. Thanks to all the folks who trade for a living who are willing to share their wisdom to new up and coming traders ! -Tony
great journal. I think we're in similar places w/ our trading (learning stage). question...is this paper trading or the real thing? As well....speaking only from my limited knowledge....you seem to have not yet adopted fully a system...I would say, if you are paper trading, find a definite system before you go live. It may sound silly and obvious, but by my own experience, its important. I've looked around many different systems, and I didn't really feel at home untill I found one paradigm that I could totally immerse myself in.