Sep 092011

An acquaintance asked me tonight if my work was going well.  I said “Yeah, really well”.  He seemed surprised.  Most think if the market is going down that all traders lose money.  That’s true for investors but not traders.  I explained that all I needed was for it to move, in any direction, and lately it’s been moving a lot.

This morning in the Globex European morning session I missed a short setup right after the open.  It wasn’t really clear so I don’t fault myself for missing it, but once the market started down it was too late to chase and I wasn’t going to fade it.

Until it got to strong support and started bottoming.  After an hour and a half of watching, I went long and collected 4 points for my patience.  I was really happy about that because lately I’ve been trading less and making more.

When ES opened I caught a nice short for 3.5 pts and was quite happy.  Things started getting volatile and so I traded on sim.  That was hugely successful too.  And a few times I was not even comfortable taking a trade on sim believe it or not.

Overall I made 18.75 pts with sim & real money.  That’s one of my best days on sim in a long time.


So that has told me a few things:

  • I really have a good edge
  • I need to be more confident in my edge
  • I need to stop being afraid
  • I need to trade more real money instead of sim
  • When trading real I need to trade larger size

I will continue this line of thought this weekend when I show some cumulative stats and the weekly results, and I plan for next week’s trading.

Have a good weekend.


  5 Responses to “Finishing strong on a great week”

  1. I liked your post and appreciate your honesty. I feel I am in the same position as you. I recently, last month or so changed my approach. I use the same basic tools but I am approaching the market differently. Specifically, I am not trying to fade as my main plan/idea approach. I worked hard on a method to go with the trend/flow and to identify the swings in the market and go with them.

    I keep an eye for exhaustion but if I miss the bottom or top thats okay since I kept giving back all that I made and then some trying to fade. I also find I am much more in tune/sync with the market too.

    Today on sim with 2 contracts I made 19 pts. and with 3 contracts I made 40.25 pts. So I am definitely on the right track with some work to do. I will take “all” the 5 points you summarized at the end of your post and read them myself over again as they apply to me as well, especially that I need to have confidence in my method/edge and put aside he fear.

    Thanks again and have a great weekend.

  2. Hey Marc,

    I’m glad you are focusing on trading with the trend. That has been hugely successful for me. I am now very cautious about my fades and I save them for once the market has gone very far and is at a strong level. I used to fade every level and that didn’t work.

    I also agree about missing the bottom. I actually prefer it that way because there is almost always a retest or a pullback in the new direction. When I missed the short yesterday during European morning, the top came while I was sleeping and I missed the pullback/retest.

    19 pts on sim is great. How long have you had good results on sim? Please keep me updated on your progress – I’m really curious to see how you do when you go back to real money.

  3. Hi Michael,

    Since I just recently changed my approach.. just over a month ago the first few weeks I just observed and made notes and wrote down levels of trades based on the strategy. So I’ve been doing sim for about a week and a half with good results. Friday I will view as a bit of an anomoly at this point until much more time has passed. I really need more time to add more data (trading circumstances) to see how I handle it and to determine what adjustments I need to make.

    Regarding fading.. like you, I have reserved those times to points where exhaustion has occured at a key level. I also changed my strategy for these times. Basically, putting on a partial and if proven correct not scaling out of the partial but rather putting a break even stop and waiting for the market to turn and give me a “go with” setups to add and trade the position from there. This allows me limited risk on the entry. Adding with the trend change also allows me lower risk and better trade position and potential.

    Thanks for your interest and I will update you and let you know how I do trading with real money.

  4. Michael, great stuff. I’ve also changed from almost entirely fading to trading context and going with the market. I’m doing this by getting on the direction when it pulls back. Do you wait for a pullback to a level or 50% or something for your entry? Thanks man and keep up the good work.

  5. I do look for pullbacks to levels and I have the session’s midpoint as a level so 50% works too. For dynamic levels I really only use midpoint, VWAP and 20 EMA when trending.

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