Sep 252011

Two weeks ago I increased size from 1-2 to 2-4 and had a good week that tied for my best week.  However the 4 contracts made me uneasy, especially with larger stops required for current volatility.  So this week I decided to do 2 contracts on every trade.  I had a few that were just 1 because I wasn’t sure of my entry timing, but otherwise I mostly traded 2. One example was from Friday, I wasn’t sure on the entry so I entered half position (1 contract) and look what happened:

It hit my default first target before I could move it, in just 15 seconds!  After that I decided to quit while I was ahead.  The MAE is correct on both trades, neither went against me a tick.  Perhaps I’m making progress with my timing.  Also note that the first trade was discussed in detail in my previous post.

The result for the week is I’m very happy to report last week made a new record for me, beating the previous best week (week 3) by 18%.

One interest statistic is my average daily profit.  In august it was 149 euros, a bit lower than average because some of that was vacation trading when I only traded an hour or two each day. This month I’m at 295 euros/day which is double the previous month.  So I’m continuing to see improvement, and what was really surprising for me was I did better this week trading only 2 contracts.

After that 15 second trade I decided to stop, not wanting to risk a loss that would ruin my best week.  So I traded on sim.  I tried being very aggressive and using tighter stops.  I was pretty much break even and then I got a nice win and ended up positive $1k.  I had only a 65% win rate yet I made much more than I typically do with a much higher win rate.  I took a few things from that test:

  1. I need to be more aggressive
  2. I probably trade better on sim which means my fear of losing prevents me from letting winners run & cutting losers short

I realize that I’m not quite ready to increase size to 4 contracts.  Thanks to Domenik for presenting his point of view on this.  I still have some issues to work out in my trading such as cutting losers quicker and it will be much easier to work them out trading 2 instead of 4.  When I feel like I have several weeks trading well, then I’ll increase to 3.

It’s been one year since I wrote a series entitled A look back on my journey and I’m working on an update.  So if you haven’t read the original, you may want to have a look.  Many people ask how I trade, it hasn’t really changed that much from what I wrote a year ago but I will talk about what changed.  So stay tuned.


Sep 232011

I hope I haven’t been overly negative in my review of trades and my performance but I suspect maybe I have.  So I plan to focus on the good as well as the bad in order to provide a good balance.  Today I had a good trade.  I say “good” instead of “great” because I cut it a little short but I did much better than usual.

The VA trend is down (that’s an understatement) and I knew I wanted to trade the short side for the European morning session unless we had an open drive up.  At the open price just stalled.  ES was at a resistance zone and Stoxx was at a resistance zone as well (specifically, a CLVN).  So I got short.  I put my first target at the pivot point and my second at the pre-market low which was yesterday’s VPOC.

Here is my main chart:

And here is how I traded it.  It’d be so nice to have these markers on my main trading chart but I don’t think that’s possible.

Here’s my DOM after my first scale where you can see my second target:

Some things to note:

  1. Usually I enter early.  So I’m trying to purposely enter slightly late.  I did a great job here and price didn’t even go against me one tick.  If only I could do that every time!
  2. I saw selling getting weaker and buying interest so I took my first target at +10 ticks which is about what I’ve been going for on ES.   I think my ability to read the market is getting better as I’m often able to get out right before a pullback or reversal.  However, what I need to realize is that any move will have little pullbacks and that shouldn’t take me out of trades.
  3. Price went on to hit the pivot which was my first target and then stalled there.  It made a higher low and I saw selling getting weak so I took profit on the 2nd half at +13 ticks.  I like to get 16 ticks on ES (4 pts) so this is about average.
  4. That little consolidation turned out to be a bear pennant and price broke below and hit my original 2nd target.

Things I did well:

  1. I was not early on my entry.
  2. I am able to see shifts in the order flow that will cause a pullback or a reversal
  3. I got 10+13 ticks which is a decent win for me.
  4. I stuck to my plan and traded only short

Things I can improve upon:

  1. Pullbacks and consolidation are normal and shouldn’t cause me to exit my trade.  I need to confident in my targets and be patient.  I need to get over the fear of losing.
  2. There was another short setup on ES later on and I didn’t take it, although in my defense it was not a really strong setup.

My search into my trading inefficiencies has led me to one recurring theme:  Fear of Losing.  I have decided to tackle this with all my force and do everything necessary.  Tony Robbins says when creating a goal one must take immediate action towards that goal.  My immediate action was I started reading Trading on Target: How To Cultivate a Winner’s State of Mind.  The market was pretty slow so I read Part I.  So far I like the book.  I would say the majority of it doesn’t apply to me personally (but probably would apply to the average reader) but it is worth reading for the parts that do apply.  I don’t seek a quick fix to my fear of losing problem, but I do hope I can learn more about it and how to overcome it.  I pass on a lot of trades that probably have positive expectancy just because they’re not perfect.  And I realize that my perfection is not the most efficient.  Recognizing and admiting this is the first step.

This blog has become extremely personal lately.  It’s not always easy to publicly write about one’s faults.  But it’s very helpful for me and helps to confront these issues, and I hope it is helpful for you too.





Sep 222011

I’ve recently written here on the blog and in my tweets that the rally into options expiration was very suspicious.  Frankly it reeked of bullcrap to me.  But I don’t try to fight such things any more.  A year ago I would have loaded up full short.  However a year ago I would have been way too early and probably broke even.  So now I know better.

Two days ago we had that late afternoon selloff and I tweeted “someone knows something”.  Well they did.  That’s why it’s extremely important not to fight it.  Today I traded only on the short side.  I didn’t trade that well as I didn’t get any major runners.  And one trade I did 1 contract, if I had done 2 I could have gotten a lot more.  But each trade is a lesson to be learned.  What’s important is that today I traded on the right side.  Short only.

When there is a strong move like that, pick your spots and be patient and wait for the the market to come to you.  I waited 90 minutes for my first trade this morning and didn’t take another trade after that.  Then today in RTH I was quite patient as well.  If I was a better trader I could have made a killing, but I’m not and I know that.  I know my limitations.  I know my edge and when it’s valid and when it’s not.