Jan 312011

I’m back to real money trading after several weeks on simulator and recorded my two trades on video.

Here is my bund chart with my two shorts marked.  I circled potential trade areas that I did not trade.  You can see my two trades were exactly at my levels.  I’ve made a lot of progress on my patience.

First trade was risky. My level was not that strong yet I want to avoid fear of losing so I take it anyway, particularly when I see 800 on the offer and it’s holding.  I figure the cost of finding out (120 euros) is relatively small compared to the potential gain so I take it.

If I had not taken it and it had been high of the day I would have regretted it. I stopped out right away. You can see I put my stop at 5 ticks but I got out at 4, that’s because there were a lot of prints there. As it turns out a 5 tick stop would have held for a while but later taken out.  Correct stop placement is really challenging for me.  A 6 tick stop can result in less stop outs however those that do cost more.  I’m currently using 4-6.

Second trade was a great trade. I accelerated the playback 5x because I was in this trade for a long time. You can see me adjust my targets. That’s me lacking confidence that my original targets would be hit. otherwise known as “cutting winners short”. But I think it was justified here as we were in a tight range and I did not want a positive day to go negative (after my first trade was a loss).  This is known as “Trading for the P/L”.

The last target I eventually moved to 85 because I thought the LVN would hold, and it was hit (not shown on video). The market then continued down to 68. So all of my original targets would have been hit.  I noted these in my journal (download the excel template here):

So let’s analyze this: The stop out was perfectly valid trade.  Risky but valid.  I took it without fear of loss.  Not easy to do when trading 3 contracts and facing a 120 euros loss!  So I think I made a huge progress here.  Part of me knew it wouldn’t work but the other part said “trade the plan”.

After I stopped out from my short, the level held the sellers which made a good long setup.  It wasn’t obvious because I had stopped out 1 tick off the high so I thought it was still going down.  Had I caught that long it would have made a huge difference in my P/L today.

Then the market came up to 94 which was the level I was waiting for.  No way was I going to miss that one, even if it took several tries.  Unfortunately the tight range had me lose confidence in my original targets.

I ranked my lessons according to the most broken last week, missing pullbacks is #2 and I did it again.  But just tracking it and writing about it will help me to be more aware of it.  And cutting winners short.  At least in this last trade I let the targets get hit.  I adjusted the targets to make them more likely to be hit but I never just said “heck with it, take the profit” even as it pulled back to my entry.  I’ve learned my lesson not to do that.  It’s stop or target.  I just have to be careful moving my targets too close because that’s still cutting winners short.

Trading is simple but it’s not easy.  Writing about this is very helpful to me and I hope it’s helpful to you too.

Here’s the video showing the DOM:

Jan 302011

In this video I go over my trading results for the week and compare to the previous week.  I am using my “trading well spreadsheet” for this purpose.  I’m not focusing on expectancy but rather if I’m trading my plan.  Specifically, am I breaking any rules, taking any invalid setups, or missing valid trades.  Some of these are related to discipline but I have found that most are related to being unable to see things correctly real time.  So I don’t expect to eliminate all mistakes or missed trades.  The ones that are clearly discipline problems must be eliminated, but I’ll never read everything perfectly real time.  The “perfect” results does give me a benchmark against which I can compare my results.

You will find more about the spreadsheets I’m using on my Trade Log & Journal page including a download link for the excel spreadsheet.

I welcome all feedback and if you find this spreadsheet / method of tracking your results helpful please let me know.

Here is the 2 week bund performance summary that I wanted to generate with Ninjatrader.  Ninjatrader support is looking into the crashing problem:

Results were pretty consistent across the two weeks.  My plan is to start trading real money again on Monday for Bund and continue on sim for ES.  I”ve been on sim for a while and it would be nice to have some income again.  So far every time I’ve taken a few weeks off to go back to sim, my trading has improved.  Not just because I was on sim but because I work on specific issues in my trading.

Jan 282011

Last week I wrote:

I believe the ES is going to make a temporary top. It could continue up to 1330, that’s about the top of my estimated range for the top. So we have ES in “top territory” as well as Stoxx.

After a week of bringing in more late longs, we start to see some long liquidation.  1300 got rejected again and this time ES dove down into the next lower balance area.  This area is key.  If it holds then another test of 1300 could be in the works.  If this area (around 76.25) doesn’t hold, then we have a correction and that will likely scare off more late longs and even bring in some short interest.

After I uploaded my image, 76.25 broke.  I really expected that to hold today so this is really major.  It reminds me of the breakout we got from the bottom Dec 3 – from one end of the range to the other and then it kept on going.

I also wrote about Stoxx last week.  While ES is testing 1300 Stoxx is testing 3000.  nice round numbers.  Stoxx is even more extended which makes it due for a correction.  I’ve drawn arrows for what I think will happen, mainly a 33-50% retracement and then continuation up.  I made this chart an hour ago, it has since dropped quite a bit.

I’ll post my trade results for the week & my latest treading spreadsheet this weekend.  A good week for me on the Bund.  Have a good one!