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.





  11 Responses to “A good trade and some psychology”

  1. I recently found your site since I wanted some information on AMT from a beginners perspective. It’s both refreshing and informative to have somebody writing so honestly about their thought process in specific trades so keep up the good work! I’m getting a lot of good info on this site as I transition from technical based trading into market profile etc.

  2. Hey Michael,

    Congratualtions on a nice trade and more importantly congratulations on your recent posts which in my opinion are amongst the most valuable so far. Yes, the posts have become more personal lately, and I have to say that I like the new direction. The progress you are making is almost tangible simply by reading your posts. Great job!


  3. Hi!
    Thank you for a fantastic blog. Very intresting to read about your progress and how you identify and tackle the problems you encounter. I myself have some serious problems with the fear of losing issue and havnt come up with a good solution yet but I can recomend Brett Steenbargers visualisation exercises. They are infact quite powerful tools if you do put some effort in them.


  4. Tobbe – His books are next on my reading list. I started with this other one because Brett has 3 and I thought I’d knock this one out before starting Brett’s. Going to be some soul-searching going on!!

  5. Steve, Benko, Tobbe – Thanks for the wonderful compliments. It’s very gratifying to know that I’m helping others in addition to helping myself. Makes it worthwhile.

  6. Michael,

    I believe you are a FT 71 member. In his 3rd webinar he mentions that you must “know that you cannot know the outcome of the next trade” or words to that effect. I can certainly intellectualize this concept but this is not sufficient.

    What’s working for me at the moment is meditation. It sounds corny but it works. More and more I catch myself before I break my rules (like getting out of a perfectly good trade on the first sign of any retracement). My only goal is to follow my plan. I grade myself at the end of the day not based on profits or win/loss ratio but by how well I followed my plan. Easy to say hard to do.

    Best of luck.


  7. hi mike, you are a true inspiration to me and your professionalism and attitude to your trading is fantastic. Congrats on 6 months of profitbility, that shows real consistentcy and you should be commended.

    I have recongnised a trait among a few successful traders i have come accross, record keeping, stats, journals and basically live and breath trading and you have it in anbundence.

    congratulations and keep up the professionalism.

  8. Jason – Thank you so much for the kind words. I feel like I’m at a AA meeting: “Hi, my name is cunparis and I’m profitable for 5 months now”. BTW 6 months will be end of October and that will be a major celebration! 🙂

  9. Hi Micheal,

    I am user of multicharts, I’d like follow your trade.
    I want plot the same chart and indicator, could you post the code for multicharts please?
    I see also that you use scale in,out tecnique where can i learn it?
    My best.

  10. I do not use Multicharts so I cannot help you there.
    For scaling in & out, it’s relatively advanced IMHO and I don’t recommend it for starting out.

 Leave a Reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>