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Behold: Shock & Awe!

Alright, well, I wouldn't necessarily describe today's trading full of "shock and awe" but I did trade my strategy quite well, if I say so myself.

No greed. No fear. No broken rules.

Unfortunately though, today's trading range on the NQ was so tight and boring, my strategy didn't produce a ton of set-ups and my profit targets were also pretty weak but it is what it is.  But nonetheless, I traded every set-up I saw except for two - the first and the last on the day due to the fact that I personally didn't feel comfortable with the probabilities.  I would have made money on the first but the last one would have caused some losses.

But as my friend Jessie Livermore once said:

“I always made money when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game – that is, to play the market only when I was satisfied that precedents favored my play.”

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.”

Amen.

I placed eight trades on the day and only suffered two for break-even with no losses, so basically 8/8. My net gain on the day is $200.80, which isn't too bad considering the NQ is about as boring as it gets:

1. -
2. $60
3. $40
4. $50
5. $5
6. -
7. $35
8. $30

Moving On...

After today's trading, I feel ready to trade my own account again and leave the simulator behind.  Since Thursday when I first went back to the sim I have done relatively well - I'll call it "good enough". I had a few issues yesterday but I was being dumb but I won't repeat that nonsense with my own cash. 

From last Thrusday through today, my sim trading resulted in 76.74% profitability, or 33/43.  Net profits were $626.80 out of $985.80 and at one point, I had 13 winners in a row. The one area of continued concern is my average winning vs. losing trade - $29.87 vs. ($35.90) but part of that was due to some sloppy trading yesterday that didn't meet my criteria - hence the nonsense. Still, I have to make sure that I manage my PnL well to ensure I keep things moving in the right direction.

An area that still needs improvement that I noticed very clearly today is my trailing stop strategy. I used it on several occassions but it was too tight and in many circumstances, price continued well beyond my actual exit and even beyond where my original profit target was. I think this is just as much an art as it is a science but either way, I will continue to work on it so I can capture a bigger run while still locking in some gains and/or minimizing any losses.

So that is that, folks. I will trade live again tomorrow and hopefully forever more.

A BOLD Prediction

It is currently 8:30 (MST) and while I have yet to place a trade this morning, I am predicting that today will be nothing shy of stellar. My execution will be unbelievably perfect...perhaps even causing a bit of "shock and awe". 

Check back later and you'll see.

That is all.

Google Ads - My New Hedging Strategy

So some of you might have noticed that I have some ads running on my blog, if not, now you do.

I figure, why not?

As long as they don't get in the way and become annoying then perhaps I can make a few pennies a month to pay for a parking meter, a sucker or even a nice Cuban cigar to smoke after a big winning day.  Maybe, just maybe, the coin I bank from the ads will simply act as a hedging strategy against my occasional losses! It never hurts to dream, right?

So hook a brother up and click on something once in a while and good things will happen to you - I assure it. 

In the meantime, this is the first and last time I will ever shamelessly plug the ads but I wanted to at least recognize that they are there and perhaps offer at least one subtle suggestion to click on something just because you like me so much.

The End.

Still Trading Like Crap

Overall, I traded like crap today. I decided to stay on the simulator today and with reason; I've still got some work to do before I risk my own cash again. I feel like I've taken 10 steps backwards and it is very frustrating.  Last week's losses are really making me second-guess myself and this is causing a lot of troubles for me.

I placed 19 trades today for a total net gain of $119.40. I was 12/19 but my average loser and my biggest loser were both bigger than my average winner and biggest winner, respectively. I easily could have avoided most of my problems today by:

1) not taking two trades that didn't meet my rules (both for loss and one being today's biggest loser);

2) moving back my resting profit targets and then watching price trade to where it should have been resting but not beyond;

3) exiting too early due to fear and then of course, watching price trade down to where my resting profit target should have been.

Today could have easily been a $300+ day on the NQ, which is pretty decent considering I wasn't putting any size on. 

I just need to keep practicing some more and I am confident I will get my rhythm back again. I will stay on the simulator tomorrow and if I can improve my execution then I will consider going live again on Wednesday.

This is what my trade sequence looked like today, followed by my charts:

1. $65
2. $75
3. $20
4. $30
5. $35
6. ($55)
7. ($10)
8. ($5)
9. $45
10. $10
11. $60
12. ($90)
13. ($20)
14. $30
15. $35
16. $40
17. $15
18. ($90)
19. ($25)

Seven Mistakes I have To Correct

1. Not recognizing a bad trade soon enough

Simply put, I am frequently too stubborn to admit when I am in a bad trade.  I tend to think that price will eventually come around to my profit target, which it does often but certainly not always. Regardless, if/when it looks like a trade is going against me; patience is no longer a virtue and it is time to exit.

Lesson: Objectively analyze the technical picture during every trade and if the reasoning behind my entry becomes invalid, get out, regardless of the gain or loss.

2. Failing to set an appropriate stop loss

This is similar to the first point and is just another safety net to protect me in the event my better judgment doesn't close the trade first.Historically, I've used an exit signal to take me out of a trade but once in a while that signal comes too late and I need to rely on a stop instead. Prior to entering any trade, I have to know where I will exit if the trade goes against me.

Lesson: Never negotiate a stop loss during a trade. No trade is worth sacrificing your account for, so take the loss and wait for a more favorable set-up.

3. Being overly competitive

I hate losing money but ironically this illogical emotion has cost me more money than just accepting small losses along the way. I often times push a trade too much just so I can make money or get to break-even when in fact, I should simply get out. Typically, the best set-ups hit the profit target with relative ease and those that just don't seem to move are the ones that end up going against me.

Lesson: The market can always win. I am not competing against the market but against myself; trade accordingly.

4. Paying too much attention to my equity curve

I've been impatient for equity growth and I've been overly concerned about my account balance. It is motivating and comforting to make money but if I pay too much attention to it, my focus will not be on execution, where it should be.

Lesson: If I focus solely on execution and risk management, profits will take care of itself. Exercise discipline and self control by checking my account balance much less frequently.

5. Allowing profitable days to turn into losers

Every time I've had a losing day, I first had profits locked up and I easily could have exited certain trades just to protect what I had already booked on the day. Instead, I used those same gains as a false sense of security, fooling myself into holding onto a position longer because I was willing to bet my gains that the trade would work out.

Lesson: Stop treating intra-day gains as free money while I gamble it on less favorable trades. Once I have gains in place, I should automatically implement a daily trailing stop to ensure I end the day positive.

6. Trading with too much emotion

I have to control my emotions, specifically greed and fear. I've lost too much money by trying to make more and I've also lost too much money by worrying so much about losing.

Lesson: Just trade my strategy as it is written. My stops are in place to protect me so there is no need for fear and my targets are conservative enough to frequently turn a profit. I will rarely, if ever, take every last tick a set-up offers so stop trying.

7. Letting previous results linger too long, good or bad

When I am on a winning streak I feel like I can't lose. When I have just suffered a big loss, I feel like I am doomed sooner than later. I have to stop thinking that past performance is indicative of future results because that is not the case. Just focus on the moment and stop putting too much emphasis on historic performance.

Lesson: Learn from both my successes and failures but also recognize that every set-up is unique and as long as I am trading to plan, everything will be okay. If I need to re-asses my plan, do it when I am out of the market to ensure any decisions are based on logic and not emotion.

# # #

I know what I need to do, now I just need to do it!

Carry on.

Another Simulated Profit

Friday's are always tough days to trade for me because I have so many other non-related priorities going on, e.g. meetings for my day job, etc.  Today was another typical Friday and as the result, I didn't have an opportunity to watch the market for most of the session.

I was able to pull up my charts around 10:00 MST but then I had to leave a while later and didn't get back until the market was about to close.  There were definitely some good trading opportunities today as the market traded in a fairly tight and predictable range.  However there was a gap down on the open that never filled and yesterday's gap never filled either so that presented an interesting mix of probabilities to keep in mind.  I am sure today frustrated a lot of traders given the fact that price pretty much just sat there though I was able to "simulate" a profit.

As for me and my trading, I continued to trade the NQ on the simulator as planned.  I will probably go live again on Monday but I am not sure.  I have a long weekend to think about it but I am leaning towards trading live sooner than later but I will definitely keep to the NQ for a while. 

I took seven trades today and hit all but one of them for a total net gain of $103.  My profits have been much smaller on the NQ even though there was opportunity to pull more out of the market. I simply have to keep things small and conservative so I can be sure to dig myself out of this damn hole again! This is what my sequence and chart looked like, followed by my equity curve for yesterday and today:

1. $10
2. $35
3. $45
4. $25
5. ($40)
6. $30
7. $15

Between the last two trading days I have hit 15 of 16 trades, which simply offers a nice reminder that my strategy is not a fluke and I can consistently trade it well. If I can simply find a magical formula to protect myself from those big trend plays that move against my position then I am in the money. But if it were only that easy, right?

So far, I think my best defense is to trade the NQ, which trades with less leverage compared to the TF and to take profits much earlier.  The latter will get me out of trades sooner than later, which allow me the opportunity to re-assess the charts and keep my position sizes in check. I looked back on Wednesday's trade and with more conservative exit triggers, I would have been fine. The challenge I've had previously was having too many potential exit rules and while that worked out most of the time, when I was wrong, it ended up causing the most damage.  

Going forward, I will use the following exit system:

1. When price closes opposite the 5 period simple moving average, I am out.  Though I will try to set a trailing stop to see if I can let price run longer, but otherwise the position will close out regardless of the potential gain or loss.
2. I will also place resting orders that represent what I would believe to be aggressive but probable for price to hit before the close, e.g. on the Bollinger Band or a previous high/low, etc.

So that is the plan, man. I fully expect that April will be my best month yet!

Have a good weekend.

Back At It Again

After yesterday's debacle, I was really anxious to get back to trading so I could prove to myself that not only can I still trade well but that there is also a great deal of potential ahead of me if I can but work out a few more kinks.  I was tempted to go live again to really make that point clear using my own cash but in the end I decided that I should follow through on the commitment I made to myself earlier and instead trade on the simulator.

I am still trying to work on creating a better risk management strategy but for now it definitely includes only trading the mini NASDAQ (NQ) given the lesser amount of leverage it offers.  I really like trading on the TF but I've got some work to do before I can continue trading the Russell and for now, the NQ is much better suited for my little account, now $4,600ish. Damn...

Another improvement to my trading strategy is to take profits much earlier.  This is going to take some getting used to because often times it will mean missing out on a bigger move in my direction but my main concern is to protect what capital I have left. I will try to get in on some of those extended moves using a trailing stop but I am still working out the details behind that strategy.  Taking profits earlier will also help me keep my size management in check since I will not be adding to a position as often as I did in the past. Whereas before my average sizing would equal 5-6 contracts, now it should average 2-3 but only as the opportunity dictates. My preference is to trade just one contract at a time but this isn't always possible, or at least, I am choosing not to make this a hard and fast rule for now.

Finally, I will implement a daily loss limit but at this point I am not sure what that amount will be, probably around $500-$600, which I would expect to be a worst-case scenario like yesterday. I won't go live again until I decide for sure but that is definitely one stop loss rule that I've got to have in place.

So without further ado, here's what happened with my trading today on the NQ: 9 trades, all winners and for a total net gain on the day of $203.40:

1. $10
2. $25
3. $85
4. $25
5. $15
6. $10
7. $10
8. $35
9. $10

All things considered, that is a fairly handsome trade for the day, also keeping in mind that this is after THE worst day of my career so far. So I am pleased with it but not satisfied.

None of the trades were too tough to manage so my risk management strategy wasn't really tested like it would have been on a day like yesterday.  However having said this, I was watching the 15 minute chart closely and to me, it looked like price wanted to drop some more in the late afternoon session so I decided to stay on the sidelines and preserve what gains I had already locked in place.  This obviously counts as a risk management strategy by cautiously staying out of the market when the risk/reward balance seems off.

I will trade on the simulator again tomorrow but this time around, I am going to target every trade set-up I see to make sure I can adequately manage my trades even if I get caught in a tight spot. I will keep everything as realistic as possible as I did today, e.g. no extra size, no extra waiting just to see what happens, no trades that don't meet my criteria, etc. Hopefully tomorrow offers a few heart-pounding set-ups that will really test the adjustments I've made in addition to my ability follow the rules. If everything passes the test then I will consider going live again on Monday, otherwise I will stay on the simulator until I have the confidence that me and my system can survive another tough day on the tapes.

Until then...

Quick Update

First of all, thanks to those who left me a comment on my post from earlier today; I really appreciate your words of encouragement.  I am already starting to feel better about the day and I am sure that I will make a comeback sooner than later.

For now, I am definitely going to try to find my balance on the simulator for the next little while and I will continue to post my results along the way. Trading on the sim has been a huge aid in the past and no doubt it will help me again. I also plan to switch back over to the NQ due to the fact that the Russell is too big for my current account balance.  Although I've traded the TF before when my account was even smaller, I am not going to press my odds anymore. 

Additionally, I have decided to continue to trade my same strategy without a tremendous amount of tweaking. Michael hit the nail on the head when he left me the comment suggesting that while I have a good overall trading system, I have a poor risk management system.  I have really struggled to find a good way to manage risk with my current strategy because it usually doesn't work well with a hard and fast stop or even trailing stop method. I know there are solutions, I just haven't figured one out yet, at least not one that I like. I will continue to look for a solution while I trade on the simulator and I will not go live again until I feel like I've identified a better strategy for protecting my capital, which is my first responsibility as a trader.

Finally, just let it be said that I am never going to quit, ever. The thought has definitely crossed my mind, especially after a day like today but quitting will simply never be an option for me. Trading is my passion and I think I am getting better at it. I am still in my rookie year so there are many lessons left to learn and that will always be the case. I am viewing today as an opportunity to learn and grow and I will do just that.

Thanks for keeping tabs on me. 

I Got Killed Today

I did everything right but the market just got the best of me. I am going back to the drawing board because while my strategy offers a great deal of consistency and profit potential, it isn't well suited for my account my size, which is even smaller today. 

I lost just over $4K today. Not all at once but over time. I had several winners too and at one point I was up over 6 points. I kept trading to overcome fear but despite my best intentions and my strict adherence to my rules, it simply wasn't enough to protect me.

I am not going to post my charts today. Perhaps I will later but it is embarrassing; just writing this post is bad enough. I feel defeated, down and very upset.  I've worked hard during the last several weeks and I've overcome a lot with my trading but today will offer the biggest test of character, determination and desire as of yet.

Today put me near the bottom but I have been worse off before and I am determined to make some changes and I will come back stronger. For now, I've got to get away from the market, clear my head and make a better plan.

There is simply no time for quitting or feeling sorry for myself. It is what it is and if I want to last, I have to pick myself back up and continue on.

Thanks for holding me accountable.

I Lost To Myself Today

I traded like shit today. I am so disappointed in myself I can't describe it. There were plenty of opportunities to make today one of my best ever but I let them get away from me. I was sloppy, slow, indecisive and greedy.  Though what I did not lack today was patience; however that same patience, combined with greed was and is a recipe for disaster.

Fortunately for me, I escaped the disaster though I easily could have put myself in a position to not even flirt with it in the first place.  When I should have gotten out and even knowing it at the time, I was indecisive and price didn't give me a second chance.  When I should have gotten out again, I was greedy and price made me pay for it.  And when I could have gotten out a third time, I was too slow and price yet again didn't wait for me to pull it together.  Then finally, I got out and it was at a much larger loss than it had to be; than it should have been.  However I am glad that I had the resolve to keep my emotions under control and when I was tempted to just "cut my losses" and call it good, at what would have been the absolute high of the trade, I drew from past experiences and worked it out.

I continue to wonder if I am actually learning the lessons the market continues to teach me. Am I paying attention?  Do I feel the pain from my losses and the resulting set-backs that I cause for myself? Apparently not enough. I am very frustrated with myself but once I finish this post, I will put it behind me and move on.  There is no time to dwell on the negatives because that will simply confuse my subconscious mind and cause me to trade how I feel so it is important to feel positive, confident and calm.  I am already starting to feel better as I type, which is one of the great benefits of this blog or any journal for that matter.

I placed 12 trades today and took five for loss for a total daily loss of -$210. It easily could have been much, much worse and I mainly credit my resolve to keep fear at bay for keeping this day from totally falling apart. This is what my sequence looked like:

1. ($200)
2. ($160) 
3. ($120)
4. ($90)
5. ($60)
6. -
7. $50
8. $110
9. $70
10. $30
11. $90
12. $70

Once again, my chart is not drawing the lines from my trades correctly so you can't make any sense of it.  I don't know why TradeStation continues to struggle with the entries and exits but it does. It seems like it straightens itself out once the session closes so if that is the case today, I'll post it later. 

TS feels really slow and it often times takes what seems like forever to get a fill.  Perhaps this has more to do with the light volume on the Russell but either way, it bugs the hell out of me. 

Anyway, tomorrow is a new day and I look forward to trading it with much improvement from today's slop-fest.

Until then...