Jun 282012

Tuesday shook me up a little and gave me a reality check.  It was 5 days in a row of losses, most of them very small losses but still losses nonetheless.  So I cut my size and focused on the essentials:  entering exactly at my levels and holding for the next level.  The result was a big success.  I think Wednesday was pretty easy to read and that should account for some of it, but most importantly I pretty much stuck to my plan.  I did scratch a would-be-winner and I did cut two short by a point, but overall I traded well and my results showed.  I made +7 trades just one lot, making this one of my best days per contract in a long time.

I will continue trading 1 lot for a few weeks and will not go back to 2 until I have a couple consistently profitable weeks where I’m sticking to my plan.  Trading 1 lot is a great exercise in patience.  I realized that scaling in and out was making me careless.  I wasn’t pinpointing my entries, I’d just enter one and know that if it got closer to my level I’d enter the second.  So why not just wait for my level and enter both?  That’s what gives the best R:R and lowest risk, in exchange for potentially missing a few trades, which in my opinion happens less than we think.

Scaling out made me careless as well.  Instead of going for my next level, which is the logical place for the market to go, I’d just take one off when I felt uncomfortable.   Remember FT and Rob can do this because when they take a small scale, it’s just a small fraction of their position.  If I do it, it’s one half of my position.

It’s too early to judge by one day but I know it just felt much better.  I can accept the 2 pt risk much easier with one lot and I can detach myself from it and let it play out.  Well almost.  But making a lot of progress.

The two winners I cut early – the first one was because price was stuck at VPOC and I wanted to go for my run.  I should have just let it ride, accepting I may give up my 2 pts in exchange for the more probable event of getting an extra point or two.  But risking my 2 for 1 more didn’t make sense at the VPOC where I felt it was 50/50 up or down.  So I closed it out.  I guess I wasn’t completely detached.

The second was on news.  I took a stop Tuesday on the news and like Great White sings, “Once bitten, twice shy”.  Oh that’s a flashback from a long time ago, I’m dating myself.  So I panicked and just got out.

I hope your day went well.  My expectation is that we poke above Wednesday’s high and then head lower, not sure if the lower part will happen this week, Sunday’s globex, or next week.  But I don’t think the move down is over.  Just a hunch, I’ll just be taking it from one level to the next, no matter which direction it goes.


Jun 272012

Yesterday I lost my discipline.  I refused to admit I was wrong and decided to “give it more room”.  A recipe for disaster.  5 losing days in a row and I’m losing confidence.  My levels worked well, it was just that I invented trades.


I’ve been debating about something for a while now and that something is scaling.  I know many trades make great use of scaling, but I think it’s a very complicated and difficult thing to master.  And right now I think it’s holding me back.  Here’s why:  On the double top at 1314 I got short with 2 lots.  Looking at the bare-bones chart here, the obvious target is the blue support level around 4.25.  So what did I do?  I took a 2 pt scale when price was holding up around 1312.  So when price got to my target I only had 1 contract.  In my view this is severely cutting that winner short.

I’ve written about scaling in the past so I don’t want to go into all that again, but to summarize:  I think the first scale should be profitable on its own, if it’s not then it’s hurting expectancy.  Sometimes people are willing to sacrifice expectancy to have a smoother equity curve or psychological comfort.  I feel like I don’t have enough expectancy to give up some of it.

So in light of my current losing streak, I’m going back to 1 lot.  I will use max 2 pt stop and I’ll go for 4 pts minimum.  And I’ll avoid scratching (another seriously bad habit of mine) and I’ll see how that works out.  In order to do this I must not invent trades.  I must trade at my levels and only trade when the next level is farther than 4 pts away.

I’m not going to worry too much about my P/L or stopping out.  I’m going to let the trades play out and see if this will work.



Jun 252012

Last week was my first losing week in over 6.   I finished -5.5 pts which isn’t bad.  But my mistakes are what caused me to finish negative.  This weekend I updated my plan and simplified things quite a bit.  So this week will be very interesting to see how I do.

One of the thing I changed was to consolidate all my levels onto my execution chart.  Usually I take levels from weekly, daily, composite, market profile, etc.  It’s nice to have them all on one place.  I really liked it.  It takes some extra work but I think it’ll be worth it.  Plus I’ll have a historical record of my levels because I’m using my Zones indicator to show them.  This indicator lets me type in my levels into a text file and have them on all my Ninjatrader charts.

Here is how my zones worked out today.  I had 2 trades.  First was a risky fade at Thursday’s low.  I thought Globex would be balanced but it kept creeping lower.  I took 1 pt loss on that one. The second trade was after the open, I got short on a pullback but I had to scratch it before the news came out and ended -1.5 pts for the day.  Another losing day!  But at least today I felt like I traded my plan well and didn’t have any mistakes.  There were some good trades they just occurred when I was away from the PC.