Oct 272011

I just realized it’s been 3 weeks since I updated my blog.  I didn’t plan on taking some time off but the last post was an important one as it was my update to a series that I had written a year before.  After that update, I didn’t really have much to write about.  I feel like I’ve said everything I’ve had to say.

I’ve been spending less time trading lately.  I’ve been really busy with family, some home improvement projects I had neglected, and playing music.  I was getting a bit burned out on trading and so cutting back a little has been very beneficial to me.

My latest work has been on reducing my stop size so that I can increase my trade size.  I’ve been taking choice setups with real money and practicing the rest on sim.  Results have been encouraging so far.

The market action the past few weeks has been really crazy.  I’ve found that if I am patient and wait for a few choice setups then I do quite well, especially during the Globex session. With the volatility, getting 4 pts is less difficult.

The Euro is currently at a 62% retracement from its last major high at 1.45.  This is a key area.  It’s a go/no-go for the bears.  If the Euro breaks above then this is no longer a retracement in a bear move and we can anticipate a retest of the high.  ES has been following the Euro so this is a critical moment for ES as well.

There is a question about whether the greek debt haircut will trigger CDS activities. I’ve read conflicting opinions. The bulls think because a deal was reached yday that the problem is over but IMHO I don’t think it is. A 50% haircut is a major increase from 21% agreed on last summer. And no one knows if 50% is enough. And if it triggers credit default swap activities no one knows what will happen. Not out of the woods yet. Doesn’t mean the market will go down right away though..

Good luck with your trading.


Oct 072011

A year ago I wrote a really revealing series entitled A look back on my journey.  The last thing I said at the end of that series was

With 6 months profitability daytrading I think this first journey is complete… But when one journey ends, a new one begins.  This new journey will take me from a 1-2 lot trader to a 100 lot trader.

So how did I do?  Am I trading 100 lots yet?  Far from it.  The year that has passed since I finished that series has been huge for me.  I severely underestimated what I had to learn and how long it’d take to learn it.  And so one year later I’m still trading 2 contracts!  I would have never thought that would be the case one year ago!

So let’s go back to October of last year.  The reason I wrote that series was because I had discovered Market & Volume Profiling, the auction market theory, and FuturesTrader71.  I knew I had to change my trading from a multiple-timeframe indicator method to a support & resistance auction method.  I was on simulator in October and had good results so I went back to real money in November and had an outstanding month making around $5k.  In December I made $700, partly due to me not being able to trade the last 2 weeks of the year and partly due to a large loss that wiped out a lot of profits.

In January I started trading full time with trading as my only source of income.  I had another large loss and that’s when I stopped trading real money and went back to sim for 3 1/2 months.  Losses were OK when I had my consulting business to make up for them, but without the consulting income I had to fix my trading problems.  That was very difficult to stay on sim for that long but I experimented and tried a variety of things and then my results became consistent.

In May I started trading real money which I’ve continued to do until today.  I had a bit of a drawdown when the Greek crisis started but I was able to adapt to it and take advantage of the volatility.  One of the major changes I made to my trading plan was to stop fading and focus on trading pullbacks with the trend.  This was a huge change for me as I had always been a “top & bottom picker”.  I thought I was good at it and that it worked, but I was only kidding myself.  I mean I had made a small amount of money picking tops & bottoms and I guess I was better at it than most (since most lose money doing that).  But it’s not a skill one should aspire to do well.  I can’t stress this enough as it has made a huge impact in my results.  Last week was my best day trading week ever so I’m confident I’m on the right track and I’m very optimistic about the future.  In the future if market conditions change and we go back to a rotational market then I will consider fading again but for now I’m more of a trend trader.

If September 2010 to May 2011 was the “FuturesTrader71 period”, the past 6 months have been “FlowTraderES period”.  He’s been very helpful to me and I’ve learned a lot from him.  I can also add RobSpain & Eminiplayer as a great source of learning for the past 6 months as well.  It’s interesting how we learn what we can from someone and then when we’re ready we find a new teacher.  If you aren’t studying a successful trader, please consider it.  I don’t think I would be where I am today if it were not for the teachers I’ve had, mainly Barry of eminiwatch, James Dalton, FuturesTrader71, FlowTraderES, RobSpain, & Eminiplayer.  It’s better if you can make contact with them but they don’t even have to know you exist, just learn everything you can from them and practice it as much as possible.  For example I’ve learned a lot from Dalton and he doesn’t even know who I am.  Note: I’m not endorsing Dalton’s paid material, I’ve learned everything from his books, blog & & free webinars, which I think is why he stopped doing them because of free-loaders like me.  My point here is trading education shouldn’t be expensive, most of the traders charging money are crooks.

Regarding trading size:  I did increase it one week and my results were only slightly better but with a lot more stress, so I went back to two.  Trading just 2 contracts is producing a nice income so I shouldn’t be in a hurry to trade more.  My current focus is on making my trading more mechanical and less discretionary so that I can eliminate mistakes.  I’m working on controlling risk and learning to trade well and once I can do that I will increase my size.  So my goal of trading 100 lots will have to wait but I’m confident by this time next year I’ll be on my way.

This morning I rewrote my trading plan from scratch.  I came up with a 10 step checklist for my trades.  I’m making an excel sheet to track these 10 items for every trade.  This way I can track if I’m trading well.  I’m not going to worry about the P/L, my primary focus is to follow my trading plan the best I can.  Once I eliminate my mistakes and I’m trading well, I will then start increasing my size.

I encourage everyone to have a written plan.  Make as many decisions as you can in your plan instead of on-the-fly as you trade.  Whatever decisions have to be made on-the-fly, try to provide a check list so that you can track your progress and update your plan as needed.  I have to admit I got really careless about this.  I hadn’t updated my plan in a long time and unconsciously my trading had been slowly adapting.  I started picking up bad habits such as cutting winners short or fading the trend.  So I’m now taking this very seriously.

A lot of people would like to know if I’m doing anything different than what I wrote a year ago.  The answer is “not really”.  My ability to read the market and understand what it’s telling me is what has changed the most.  I still use the market & volume profile levels, I still wait for price to come to my levels, and I look for the market to pause there and start to reverse and I enter my trade.  It’s really simple.  And as I said, I avoid fading.  Trading doesn’t have to be more complicated than that.  It sounds simple but it’s not easy.  I’ve spent one year improving and I’m still far from perfect.  I estimate that if I could trade well I could make 2-3 times what I’m currently making.  Trading well is really powerful!

I plan to change the focus of my blog a bit, from my monetary performance to “trading well” performance.  I plan to write more about the challenges of trading well and talk about some of my mistakes.  Also I have been posting my thoughts & plan before each session (European morning & US cash open) on Twitter so if you’re interested you can follow me on Twitter and comment on my thoughts.  Feel free to disagree and/or ask questions, that’s what makes Twitter more fun than the blog – it’s much more interactive and instantaneous.

So that’s about all I have to say, I want to wish everyone luck in trading well and thanks for reading.  I want to especially thank every trader who has commented on my blog and given me things to think about.  I’ve learned a lot from you guys.  This blog has been a great help to my trading and I hope it has been helpful for your trading too.




Oct 022011

Sorry for lack of updates, this past week was really busy for me.  I didn’t trade very much due to some personal commitments.  On Thursday I went on a field trip with my daughter’s class.  We went to Thoiry which is a zoo/safari in France.  It’s actually not too far from where we live and I’m not sure what the safari animals do when it snows.  The animals looked happy, at least the two lions that started mating right in front of our class!  One thing that was very cool was we were right next to the tigers with only a window between us.  That’s the closest I’ve ever been to a tiger.

Two other days I had appointments in Paris.  On the days I got home in the middle of the US morning session I traded on sim, not being comfortable having missed the pre-market and the first hour.  I did well on sim so as usual I just need more confidence to take my setups when they occur.  Fortunately for me Friday was a day that I got home late.  In studying what I missed I probably would have taken a loser there when ES made a new high and then didn’t follow through to the upside.

So that’s really good news that I shattered my weekly record despite not trading for roughly half the week.  Half of my winnings this week were from two trades, both of which I was going for a big win by targeting a gap fill.  I stopped swing trading a while ago so I could focus on day trading and ultimately my goal is to hold a portion of my day trades when the stars lined up.  This week they lined up twice and I took advantage of this.  It worked great and it’s something I want to continue doing.  Without these two big wins I would have still had an above average week.

Avg(4) = 4 week average

A year ago I wrote a series of blog posts entitled A look back on my journey.  It’s hard to believe that was a year ago, it seems like yesterday.  I will be posting an update to this series in the near future so if you haven’t read it, you may want to read it.  I just reread it and surprisingly enough, not much has changed since then, except for my performance.