Working on Consistent Profitability

So quick update...I've spent the past two days really trying to figure out what is going on. I've come to a couple conclusions.

1.) Im just doing way to much while Im trading...I've got my trading journal, cognitive journal, notes, filling out trade sheet, analyzing PA, trying to manage a trade, writing down how im feeling/nerves/etc while in that trade, etc

I believe my trading has really suffered b/c of this and I just have really not been trading well. Im mean bad.

2.) Im not comfortable with the noise in the CL right now. Today, I decided to only take set-ups that still fell in a tight stop window and if I got stopped out b/c of noise, then so be it. Im just not comfortable placing a 15+ tick stop. on top of that, I tried to take a couple of b/o's but similar deal, its was a go no-go trade, no wiggle room, either it took off or it didn't. Today was especially hard, b/c you were getting so many backfill bars that were 20+ ticks in size.

I feel i've made huge progress on the emotional front but at the cost of losing money. Which is something I was a bit worried about when I almost quit two weeks ago. Yesterday, for example, I blew right thru my max loss for the day without even realizing it b/c I was so focused on how I was feeling and keeping my nerves under control. Im focusing/concentrating really hard on managing my feelings and my set-ups/rules get blurry without me even really noticing that a trade set-up is good or not.

Im not really sure where to go from here. Im having a really hard time trading this market, today, for example I was all ready to get in near the beginning of the down trend and then again get in fairly early at the end of day uptrend, but I just couldn't take the trades b/c they were requiring 15ish tick stops.

So I may sit on my hands or I may do more of the same and only look for those tight stop trades.

Lastly,
Im not sure how Im going to manage my journals/notes...the emotional journal/exercise/etc are really helping chill me out, but i cant just keep throwing money at it while I sort out my emotional well-being.

 

i hope Matcha and KDASFTG dont mind, thought I would throw his/her quote up...pretty awesome words of wisdom and I definitely fall into a lot of this.

For me as I've said before, Im really working on 2 fronts, the emotional front and trading front. Im a big believer in you only go as far as your "weakest link" will take you...whatever that may be in life...job, relationship, sports, trading, etc. My weakest link is definitely my emotions. While i feel I could continue to hone my skills/set-ups/etc trading, I dont believe that will last in the long run. I may have 1 or 2 good days/weeks/months whatever, but the emotions will come back to bite me eventually.

So as I said before, not totally sure where to go from here. i may change instruments, as some have suggested, while I work out my emotions or it may be something that I don't have the funds to "just work through and hone in.


Quote from KDASFTG:

Matcha,

“Much Learning Does Not Teach Understanding”.

I think your wheels are still on the rails, so to speak, but I believe you are about to take a non-useful sidetrack from your objective of disciplined trading. But before you move any further down this path, at this time I feel it is my obligation to redirect you. Your choice is to accept or reject, and I'm at peace with either decision.

Matcha please excuse me but like Redneck, I'm going to be frank and candid, and you need to fully comprehend and understand what I’m about to say: You have only just begun to learn about trading and the trader’s mindset. These concepts are still very much new to you. You are still very much a “babe in the woods” with learning these skills and techniques. And further, right now it doesn’t even occur to you that some of us out here in the ether of cyberspace have been working for decades to earn the skills we ever so politely share with you. But as the saying goes; “What you gain too easily, you esteem too lightly”.

And, I can see by reading your comments over the last few days that, your “expectations” about where you think you are, and the reality of where you really are, are pretty much out of line. As MD says in his book, “there is nothing more painful than an unmet expectation”. You unwittingly bear witness to this regularly now. This is because, I do think that you believe that, since you’ve diligently “paid your dues” by picking up some new dynamic techniques, or reading MD once or twice, that you now, fully understand the technique, or see exactly what MD is talking about with this “thinking in probabilities” concept. This is understandable, you have been working hard. Well sorry, but I’m here to tell you that you still have not as yet learned the lessons.

* Seeing the lesson is good, but it doesn’t mean that you know it.

* Knowing the lesson is better, but it doesn’t mean that you understand it.

* Understanding the lesson is infinitely better than knowing, but it doesn’t mean you own it.

* Matcha, its only when you OWN IT, that you can BELIEVE IT,...... at a level where you can CONSISTENTLY ACT ON IT.

You see, much learning does not teach understanding, but you must learn that understanding is only just the beginning of real learning.

As I read your words, I watch as you set yourself up for your daily emotional rollercoaster ride. And, I can’t help but wonder, what kind of inappropriate beliefs are you now inculcating with this last ride. What kinds of mental damage are you now imposing on your belief system and trading psyche?

I can see that right now, you are no longer in control of your “state of mind” while trading. The market has more or less control over you, and over your state of mind while you are trading. This is because the results of your last few trade(s) unwittingly dictate and determine your current state of mind. I can see it in your writing.

If you have a winning day, you’re on cloud nine. Even to the point of offering your help to the poor unfortunates who don’t as yet have your level of achievement. But, by the same token, if you have a losing day, then its “what have I done wrong now”, "back to the drawing board", "oh when will this frustration ever end". Somebody out there in cyberspace,….help.

Please excuse my candor in the last few paragraphs, but I had to say these things. Now, on to resolving some problems. First, lets define one particularly recurring problem: This problem is that you are so overly concerned with the RESULTS of your trading, that you totally ignore the “PROCESS” of your trading. At this stage of your development, your primary objective is LEARNING the appropriate SKILL SETS necessary to succeed.

At this point in your development, who gives a tinkers damn about whether or not you made a nickel or dime today in Sim or Live, but thank God you had the good sense to be in Sim. However, the real issue for you is; what skill sets or techniques did you exercise, practice, or hone today, and how well did that process go? You must move your current focus from the "win/lose" results of your trading, to the process of your trading. Profits are the “by-product” of the “process”.

When your focus is the process, it changes things for the better. You will see more in your charts, you will understand more from your charts, you will be at one with your charts. With nothing to fear from your charts anymore, because fear is not your focus, they will begin to speak to you with clarity and purpose.

In the society we have built, we all have an ingrained fear of being wrong. Our society is built to punish those who get it wrong. However, in the trading world, we understand that being wrong and losses are an essential part of the "success process". Our world is different from the outside world. We need to think different from the outside world, and sometimes our ideas are diametrically opposed in our market environment. This is now your world. You learn to accept being wrong, as being ok, and to manage trading losses, as you would business inventory.

More importantly, you must mentally move your Center of Focus. When your Center of Focus in trading is to learn, practice, or hone a skill, who among us is afraid to learn, practice, or hone a skill? This is the “mindset” you enter into as your trading day begins. Your thoughts as you begin the day are that; “Today I will get the opportunity to exercise my skills again”. With that kind of attitude going into your day, you start off with a very real sense of "Power and Control".

This is because you do in fact have the Power and Control. When your focus is the process, surprisingly, you will experience very few “emotionally down days” from your trading. This is because you are not riding an emotional rollercoaster anymore with "win/lose" up and down results. You will gain a lasting sense of control over your trading that will stay with you for many profitable years to come.

In time, you will also come to realize, that this really is a, pattern recognition numbers game,…..THAT YOU NOW OWN!

Now Matchhopper,……go get to work on that!

Master K

“crass dismissed”

 

You need to find a trading instrument that fits your comfort level. Basic entries on CL trades often require 20 tick stops. Carefully calculated entries can allow for smaller stops, but you need a lot of experience and screen time to learn how to trade that way. The good news is, either way you trade, the 20-tick stop survives the majority of trades that will become nicely profitable. The bad news is, CL is way beyond your comfort level at the current price and volatility level.

On a related note, I posted a while ago on a psychology thread something I think you will be able to relate to, and it may inspire you to first solidify your statistical edge based on research and hard data, THEN learn to master the emotions and trust your edge without cheating:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=216222&perpage=10&pagenumber=3

Once you have confidence in a solid CL trading strategy based on probability in your favor, 20-tick stops will not be a problem because you'll be taking 40+ tick profits quite often.

 

I use a voice activated digital voice recorder when I can't keep up with journaling and bookkeeping. Transcribe after market closes.

 

You can use Camtasia to record the whole thing, video and audio. Works great. I recorded some webinars for NinjaTrader. You can try a 30 day free trial. http://www.techsmith.com/camtasia

http://shop.ebay.com/?_from=R40&_tr...w=camtasia+studio+7&_sacat=See-All-Categories

Or you can do what Howard's suggesting and also use Dragon NaturallySpeaking to transcribe the audio from your tape for you. Probably eBay is a good place to buy this. http://shop.ebay.com/i.html?_nkw=dr...tudio+7&_osacat=0&_trksid=p3286.c0.m270.l1311

Also both are available for a really cheap price if you're a student or know someone who could get it for you. For some reason this site's not working now.http://www.CollegeBuys.org But the academic version is also available on eBay.

 

Hey Guys,

So I've decided to call it quits. Pretty bummed about it but ok with it. Last night and this morning, I was thinking more and more about how I was feel about day trading and the process. I've realized the past two weeks I really have not enjoyed trading at all and its getting worse and worse by the day. Its feeling more like a chore to analyze my day, figure out my set-ups/emotions/etc. Usually, I really enjoy doing my pre/post market analysis, figure out what I did good, what I did bad, all the mechanical stuff, but lately its been like pulling teeth and Im almost dreading it. I told myself when I first started that if I ever stopped having fun with trading and stopped enjoying it then I would quit. And Im definitely there. Sucks being chalked up as another failed day trader, but thats the way it goes. I wish I had stronger emotional fortitude and better mechanical discipline, but as I said, Im really not enjoying any of it.

So thats that. I will probably shift back to my options swing trading after a little bit so im not quitting the markets all together, but day-trading isn't for me. I would like to thank everyone who chimed in to help and make me a better trader, especially all of those lately trying to help me work through this bad patch. A special thanks goes out to NoDoji and bigsnack for spending numerous hours checking my trading out and trying to assist. I wish everyone else continued success and hopefully some readers and newbies learned a bit from my journal.

 

It takes guts to accept falure and move on. And I congratulate you for that. Many day traders just keep going on for years in illusion, slowly draining their accounts. You've done your best and realized that it's time to move on with your life. Good luck to you. I'm sure you will succeed in your future endeavors. Thanks for the journal!

 

If something you are doing is not fun, you cannot do it well. Not only is your action wise, but I admire your willingness to make it public.

 

When I first started trading, I did a lot of swing trading via options and did quite well. You have limited fixed risk and potentially large reward.

Day trading is a LOT of work. It's a real full-time job that I would guess is sometimes like being an air traffic controller in terms of intense focus and concentration required to make the most of it.

With swing trading off a daily chart, you have plenty of time to review charts, identify setups, choose entry points, place your OCO orders and then give the trades limited attention, generally at the end of each day.

Then compare that to day trading swings in a volatile instrument like CL off a 5-min chart. Each of my trading days from 7:00am to 2:30pm ET contains the equivalent of 90 "days" for a swing trader using the daily chart. You have to learn to stay very focused, react quickly and always be a step ahead to remain successful.

Even trading a slower-moving instrument like the stock index futures requires vigilance so you don't become too distracted and miss the few great setups that appear each day.

You've demonstrated that you know how to pick good price action entries on trades, so I think you'll do well in your longer- term endeavors.

Good luck and skill!

 

Tlow,

I've enjoyed our chats, and if you aren't having fun during the process anymore then I applaud your decision as well. Take care and have a good weekend!