Nov 222011

I can’t believe it’s been 3 weeks since I updated the blog.  I’ve had a few people ask me if I was still trading!  I guess they don’t follow me on Twitter.

As I’ve said in the past, I think Twitter is currently the best tool for public real time collaboration in trading.  To me it makes a lot more sense to Tweet my plan before the open, and then tweet what I’m seeing real time.  Tweeting takes a few seconds, writing a blog post takes a lot longer.  This may not seem so obvious but when writing a tweet it’s a short idea and you fire away.  On a blog post I think things over, reread, proofread, rewrite, add images, etc.

I said Twitter is best for real time.  After the market is closed is a good time to review trades and study what went right and wrong.  And that would be best shared via a blog post.  There’s a problem though:  My time zone.  I trade until 6pm my time and then that’s it, family time.  If I’m lucky to get some time to do my homework at night I do it but usually I do my homework in the morning before the open.  Which is a real challenge while getting two kids ready for school.

So when something has to give, it’s the blog.  And to be honest I’ve haven’t had much to say lately.

There are a few tricks to using Twitter though, and many traders I know purposely don’t even look at it.  Here are some ideas:

  • Only follow a few traders who trade in a similar style as you.  Or if you’re learning, those who trade in a style that you would like to learn.  Traders on Twitter all have different ideas and methods, so it can get really confusing.  For example I follow one trader who is very nimble, likes to fade, and can flip directions on a dime.  Another trader looks for big setups and doesn’t fade.  That’s OK because I am very familiar with them and understand their thought process, but someone unfamiliar with them could be totally lost.
  • If you have your own method & plan, don’t be influenced by Twitter.  I used to catch myself taking trades outside my plan because someone else Tweeted a trade idea.  That didn’t work very well.  So now I do my best to stick to my plan.  If a trader whom I respect tweets something supporting my trade, it gives me confidence.  If they Tweet something that doesn’t support my trade, I can re-examine it to make sure I didn’t overlook anything.  But it’s important I stick to my plan.  I have a hard enough time doing that without Twitter.
  • Don’t expect traders to tweet everything.  I’ve been long thinking I was long with another trader and then had them say they’re scaling out of a short.  Oops!  They flipped from long to short and didn’t tweet it.  Which leads to the next point:
  • Don’t try to tweet too much.  It’s really hard to trade & tweet.  I’ve missed key setups and/or scales because I was not fully focused on my chart.  While waiting for a trade I set alerts and try to do other things, but when I’m in a trade I need 100% focus.

I emphasized “public” when recommending Twitter.  I think Skype is the best tool for private collaboration and I’ve been doing that with a few other traders.  It’s useful for me to explain what I saw and even more useful to hear another point of view when someone else explains what they saw.  Which leads to:

I think it’s very useful to have a “trading buddy”.  If you don’t have one, I suggest finding one.  Someone better than you is a good choice but even if it’s someone not as far along as you, you will learn by explaining things to them and by answering their often challenging questions.  I suggest Skyping with them before the open and after the close, and if your trading methods are very similar, maybe even while trading.  I’m still not sure on this last point as it has tons of advantages but also can have disadvantages as well.

On a personal note, the main reason I’ve been quiet is because I’ve been working on my own issues that are mainly psychological.

  • I’ve been adapting my plan and working on decreasing risk.  I’ve been trading mostly 1 contract so that I can work out these issues without stressing out.  I use tighter stops and trail my stop.  I expected to make less, like half as much, but in fact I’ve been doing OK trading just 1 contract.  Now I hate trading 1 because it’s harder to stay in for the big moves so this is just temporary, but it’s a lot less stressful.
  • I’ve been working on staying in for my full target instead of finding excuses to cut the winner short
  • I’ve been working on trusting my stop loss instead of scratching trades.  I hate losers so usually I prefer to scratch rather than take the risk of a loss if the trade isn’t going right.  However even if there is 50/50 chance of a loss, as long as my target is bigger than my stop, it’s still better to sit tight and let it play out.

So I’ve been working on these issues and there isn’t much to say.  I can show a chart with my target and where I got out but I don’t think it’s very useful.  Here’s an example on my two Stoxx trades this morning:

The first I cut short.  Now I had a good reason to do that, based on the order flow, my reason disappeared a minute later.  Need to be more patient.

The second is a classic mistake that I make a lot and I really need to get that under control.  It went to 60 and didn’t hit my target (57) but I could have gotten out at 62 and had 7 ticks.  So avoiding a potiential 5 tick stop was not a good decision on my part.

So you can see a lot of my work is rather personal, psychological.  So that’s one reason I haven’t updated.  It’s not easy to talk about the more personal issues, and since I don’t know if this applies to everyone I’m not sure it’s useful.  I tell you though, once I get these issues worked out, I will be tearing it up! <grin>

As always, I enjoy feedback on what you find useful or what you’d like to see.  Explaining this does help me but this post has been in progress for over 1 hour so it takes an enormous amount of time.

Good luck with your trading and maybe see you on Twitter.




  8 Responses to “Trading collaboration on Twitter and psychological issues”

  1. may I ask you what instruments you trade? i once read you only trade ES but this trade was in the FESX? so at what time are you concentrating on what instruments? thanks a lot!

  2. Hi Thomas, my main focus is always on ES. During the European morning session I track Euro & Stoxx. Since Stoxx & ES are so correlated, I will take my trades on whichever offers the best setup. Sometimes I can get a better entry on one than the other, or sometimes one will have a better R:R. I prefer Stoxx whenever possible because it has more volume which makes it easier to read the order flow and also it has lower commissions and higher leverage (due to Euro exchange rate). But I will say that the majority of my trades are on ES. I had a few ES trades this morning but only showed the Stoxx trades and only to illustrate my areas of focus.

    During the US Morning, I track Euro & NQ but I only trade ES.

  3. thanks for the quick reply…

    i was asking because i am comparing some instruments which i will follow in the future…. my focus right now is on ES and FESX and FGBL and ZN…

    have you ever looked at the FGBL (bund)?.. it has volume and better moves than the other high volume instruments (regarding R:R) because of the smaller tick size…

  4. Thomas – I used to trade Bund, it was my favorite & best instrument. But when the European yields started jumping with the Greek mess I stopped as it was way too volatile for my tastes. Plus doing bund + ES was double the work. Stoxx + ES are so similar it’s easier for homework. But Bund is really a great instrument.

    If you are doing both ES & FESX is this during European hours or US? And FGBL/ZN? Are you consistently profitable with all those? If not then limiting yourself to one or the other might be a good idea. I do much better when I focus on strongly correlated markets. Often one will move before the others and when you learn to recognize it, it’s very helpful.

  5. i am not trading right now (university is consuming all of the time)… so i cannot tell if i would be profitable trading these combinations of instruments…. i also dont know if i am going to watch all of them when starting to trade (again)… especially ZN does not move too nice… however it might confirm a bund trade…

    actually i thought i would focus on FESX and FGBL during the european morning and just glimpse at ES and ZN to (maybe) find confirmation… and during european afternoon / US morning i thought i would do it the other way around… however fesx and fgbl still move nice in the european afternoon / US morning… however in the end i would just trade that setup that looks the best in one of the correlated instruments…

    one other obstacle i couldnt overcome yet for a long time is how many charts to use per instrument… and i also dont know whether to mix minute and tick bar charts… i hope i can figure this out when i am starting to trade… however i would be thankful for suggestions.. 🙂

  6. Thomas – The problem with uncorrelated markets such as equities & interest is doubles your homework. If you have tons of time then that’s fine as you can learn more, assuming there is no sacrifice in quality.

    For how many charts.. My main trading chart is currently a 15min chart. I’ve experimented with everything but I use 15min for big picture (used to be 30min), 5min to zoom in a little, and 1500 tick & 5 tick reversal charts to time entries & exits. But this is highly dependent on your method and it takes a long time to work things out.

  7. sorry but what do you mean with reversal chart? what is it for example called in ninjatrader?

  8. When price reverses 5 ticks it creates a new bar. For Ninja there is a custom indicator for this from Move the Markets, I think it’s MtM PNF or something like that, search for it.

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