Dec 252012
 

Christmas came early for us this year.  Our baby boy was born a few weeks early, and just came home from the maternity this Christmas morning.  I was going to take a few weeks off of work but my client didn’t renew my contract for 2013 so I may end up with even more time off.  And I really need it.  Some personal projects have been on hold for a while now due to lack of time.  So I’ll be quite happy to have several weeks off.  And that’ll also give me a chance to do some more trading.  Of course I’ve already sent my CV for a position so if the client accepts I could start any time.

Speaking of trading.. my trading has gone very well.  Not that I’ve made a killing (I haven’t), but my “system” is working.  I feel like I’ve finally got something that is repeatable.  And that’s something I’ve been missing before.  It’s also low-risk and low-stress.  I’m not executing perfectly, there is a lot of room for improvement, which is encouraging because the results are already good and if they get better that will be great.  My main focus is repeatable (consistent) and low-risk.  This combination will allow me to start increasing size.  I plan to do that early next year, but I’m not in a hurry.  I want to improve my execution.   I’ve passed on a few setups because I didn’t have confidence, only to watch them work.  I know increasing my size will cause me to doubt my setups even more so I want work on that and get some more data before increasing size.  If I can demonstrate more consistency then I’ll have more confidence.  At this point my method seems pretty sound so it’s psychology now.  I’m up +10 pts in the first 3 weeks of December, and there were many days I didn’t trade and many days I was here but didn’t take a trade.  So I think I’m averaging about 1 pt/day.  Which will be great if I can scale that up to 4 contracts and more.

In the next few days we’ll be giving bottles and changing diapers around the clock.  And I’ll be enjoying every minute of it.

Merry Christmas!

 

Dec 012012
 

I haven’t been blogging lately, but I have been trading amongst other things like work, family time, homework with the kids, exercise, and playing flute & piano.  It’s a turbo-charged schedule during the week and if I am to dedicate a couple hours/day to trading, it has to be worth it.  And so far I think it is.

November was a great experience for me.  I simplified my trading quite a bit.  Actually that started on November 2 when I had a full day to trade.  My goal was to simplify as much as possible so that I can focus on execution and eliminate costly discretionary mistakes.  And the results are very encouraging.  I ended up 11.25 pts.

Interesting enough I had 10 pts in losses on two days that were plagued with mistakes.  Each time I make what I believe to be a preventable mistake, I take some notes and update the plan to try to reduce the chances of it happening again.  Without these two bad days, I would have made twice as much on the month.  That’s a really powerful concept for me.

I traded 1 lot and I go for 2-4 pts.  My largest winner was 3.50 pts and largest loss was 2.25.  My average win was bigger than my average loss, which has been a priority for me.  Since these metrics are skewed by scratches resulting in small wins, I think the metrics are very positive.

Here are my stats, I’ve drawn arrows to the stats that I am watching the most:

 

My goal is to improve on these stats in December by letting my trades play out more (less scratching) and reducing preventable mistakes.  If December goes well then January I will go to 2 lots.  I’m taking it nice & slow.  December is going to be busy, we have a major project deadline at work, kids have Christmas parties, shows, and concerts, etc.  And don’t forget Christmas shopping.

I’ll write more when I can.  I want to thank everyone who is still along for my adventure and I hope your trading is going well.

PS: A few more thoughts:  Eliminating half of the losses on just those two big losing days would result in a profit factor of 2.0.  With a simple, repeatable method that has low risk and drawdowns, one could trade 4 lots or more easily.  That means with just slight improvements to my trading, I could generate a potential $3200/month in trading income just trading the last 1-2 hours of each day.  And going to 8 would double that.  So my focus isn’t on squeezing out every tick on my winners, but just having something repeatable with low risk so that I can start increasing size.  Thanks to Max for sharing his ideas with me about this concept.

 

 

Nov 042012
 

Thursday was a big holiday here in Europe and when holidays take place on Tuesday or Thursday, the French usually take the extra day to make a long weekend.  We didn’t have plans to leave town so I would have worked Friday but I would have been the only one.   So I took the day off.  And that let me have my first full trading day in a very long time.  I’m used to trading the last 90 minutes and it was very challenging trading the globex and the open.  In fact I almost didn’t trade, but I figured I shouldn’t waste this extra opportunity.

The results were very good so I thought I’d share them.

 

The first trade was a long in Globex.  I couldn’t stick around so I let it play out.  I later came back to see I had stopped out by a point or two, just before the huge run up.  Right idea, my tight risk control just didn’t let it work.  That’s ok because I’m committed to having very tight stops.  I share this trade list partly due to a response I just recently made to a comment by Max about using stops.  For a while I used very large stops or no stops at all (I call those pain stops because you stop out when the pain is too great).  That worked for me most of the time but when it didn’t, it wiped out many gains and the effects on emotional capital was even greater.  I have a hard time taking stops.  Even when trading 1 lot.  I just don’t like being wrong and losing.  That’s a great personality trait for a software engineer, but a terrible one for a trader.  So I’ve found the smaller the stop the easier it is to take.  A 6-8 tick stop doesn’t hurt me.  A 4-6 tick stop is almost in the “don’t care” category.  I trail my stops quickly once it moves my way so I’m often in the “don’t care” category.  And that’s the best place to be for trading.

However once a loss gets to be around 4 pts it’s too painful to take and that leads to one of two things:  Joy at being able to get out with a smaller loss (when it comes back) or the extreme pain of taking an even bigger loss (when it doesn’t come back).  I think we must avoid this at all costs.  Not just for the monetary loss but for the emotional capital loss (thanks to FT71 for this term).

I’ve been targeting the next area of S/R which is often between 1.5-4.0 pts away.  If it’s 1.5 I try to skip the trade unless the risk is 1 pt or less.  If the R:R is 1:1 that’s a 50/50 trade and it’s not the best opportunity.  Trade #2 was one such trade.  I don’t remember the risk but it was around 5-6 ticks.  I actually targeted two on that one but I had planned to reverse if I saw sellers defending 1426.00.  They did and I flipped.  It’s very rare that I flip.  I try to trade with a bias.  That long was counter-trend and was not a great trade.  The shorts were the best trades.

One may ask why I took just 2-3 pts on a huge trend day.  The first reason is that I’m trading 1 lot in a way that will be scalable.  So once I add the 2nd lot I will still take that first off at 2-3 pts (like Rob Spain, FT, and many other traders) and use the 2nd lot to capture more of the move.  The 2nd reason is I took that scale at support levels which could have held.  It was not an obvious trend day until price broke below yesterday’s balance area.  I actually thought price was going to go back up.

I hope all that makes sense.  I apologize for posting tiny charts but my disk usage is almost maxed out and since this blog isn’t providing an income, I hesitate to increase my costs.

I did some more “fine tuning” to my plan during my time off the past 4 days and will test these changes out over the next few weeks and will share results.  Thanks for reading and I hope your trading is going well.