Same drill as yesterday. Trading small, copied from ES chart for ES data to MES (Tradervue version showing the actual number of trades). Playing it conservatively. ES as usual looks much more exciting (higher P&L below), but it's okay. I know the deal. I can knock it out like this totally relaxed. ES in the live account takes years off my life and invariably results in blowing up at some point. I'm leaving town to ski this weekend, so probably no more trading for me until after the weekend.

Happy Easter!

Not much changed since last Sunday's levels. It chopped as expected. The exact same chart of prior times over the last year when it chopped up here and then went back down still applies this week. CPI might move it out of here and that would equate to about the same amount of time it chopped on prior occasions before moving away from this zone. Maybe up this time instead of down?

My main thought coming out of last week in light of comments I've seen in other journals concerns scaling in. I think the whole debate about whether or not to scale in is specious. It's like arguing about whether you or not you should use a Phillips Head screwdriver. If you use it on a slotted flathead screw, then no. Or like arguing about the value of iron condors in SPX. If it's on the eve of the CPI release and you expect a multi-day trend to kick off then a ratio back spread or a straddle is likely better, but it doesn't negate iron condors. Scaling in, particularly with tight trailing drawdowns, can allow you to avoid missing trades because you have so little wiggle room that you always need the "perfect" entry (which does not exist). Or getting comparatively huge drawdowns on trades that should have been fine, had they been entered into gradually. Of course, if you are scaling in with the size you should have ended up with at the very end of a multi-contract scale, and/or you're starting in the middle and not at the outer edges of your ranges, then you are just trying to jam a Phillips Head into a flathead screw.

Hit my daily loss limit today.

Starting this week I had lowered my max loss from where it was (about 10% of my drawdown), to just over a day's normal profit ($500, and I am actually going to lower it to $450), which is right around 6% of my trailing drawdown on my Apex eval. I did this because if I keep the daily max loss relatively pain-free, i.e., about 1 day's profit, then it's not a huge deal and I don't start swinging for the fences.

I typically hit my max loss once a week, two times maximum, and not adhering to it is really the only thing that has undermined my trading. At this stage, I am using the eval to work on my risk management more so than counting days and being hyper-focused on passing. I realize that for my trading to work long term means that I have to get over increasing risk when I start losing, which has been my Achilles' heel up to now.

Swinging for the fences gets me back on track about 80% of the time and leads to blowing up the other 20% of the time (and bent out of shape 100% of those instances), which basically means always blowing up sooner or later. So I just have to take the daily max trading halt when it happens, look at what happened, and continue plugging away the following day. It's a much longer process (two steps forward, one step back) but my thinking is that when I get this to a point where I am totally comfortable with being able to take a day's profit max loss and quitting, then resuming the following day then I am on the right path and I can add my cash account back in and work through evals slowly.

My biggest psychological challenge to date has been knowing deep down (and not even so 'deep' down anymore) that I was unable to stop and that this always has the same end result. That resulted in a negative self-reinforcing loop. I am finding that if I keep the max daily loss small it feels increasingly good each time I am able to stop and get back on the next day with a relatively small hit. Thus, I am draining the fear quotient out of my day turning negative. Conceptually, I've known about taking the long view in trading for a long time. Conceptually... I do use platform risk management tools to do this, outlined in the psych/ discipline thread.


Back in tomorrow!

Could've traded it full-size today. My sim account (from which I copy to eval account) is up by a factor of 10 and $149 max drawdown on the day (the higher P&L below). But I still stayed with micros as I am not necessarily on a mission to get the max profit right now. It's more about the stuff I talked about in yesterday's post. In terms just of performance stats, this is the more usual. And while I didn't make up yesterday's losses, it's precisely that which is good: I wasn't trying to make up losses as I would have been had I continued yesterday. Over time this will work. Today I reduced my max daily loss to $450 and added a position liquidation at $230 drawdown on any position to avoid staring at it until it hits my DLL (the worst-case scenario that happens once every so often). Other than that, it was like watching paint dry all day. Below is a screenshot of what my trigger chart looked like all day. I stopped at 11:45 AM PST. I'm so hypnotized by the slowness of it all, I'd hate to get caught off guard toward the end.

Got CPI wrong today. Had lowered my DLL to -($300) and I'm out for the day.

I'm toying with the idea of practicing in sim, but today is not an ordinary day so I'm not sure about the value of doing that. My time may be better spent elsewhere. Gonna work out and see how I feel about it later.

Yesterday night I canceled my $7.5K Apex subscription as it was about to renew, and replaced it with a $5K subscription as this fits nicely with the parameters I worked out (all of them on the 80% discounted special they're having). Because even though I am not fixating on passing so much as using the evals to work on process, the goal is ultimately to get them going and the $20K profit requirement doesn't make sense given my trade parameters, which actually fit better with the $5K trailing drawdown and $9K profit target requirement.

I could have scaled everything up, but then I'd have to start memorizing a whole new set of parameters and reset my ATMs, etc. I can just get 2x $5K evals for the price of the $7.5K one and keep everything the way it is. It's easier to just reduce the daily max loss to ($300), which is 6% of $5K and still works well within my parameters. I have to hit my DLL 16 days in a row to blow out. This is impossible. But we'll see how everything evolves over time.

As I said the day before yesterday, at this stage it really is not about counting days and profit/ loss to pass the evaluations. It's really just about respecting DLLs. I think that's the only thing left for me to master. I mean, there is a lot more to master in terms of over all trading. It's never-ending. I just mean in terms of having a positive equity curve.

I have to say, I feel really good about it so far this month. I have hit my DLL three times and respected it each time, and actually reduced the max loss each time too, from -15 pts to -10 pts to where it is now, -6 pts. It's a process of figuring out what works and certainly, at -6 pts with my current sizing and settings, it works. I also just reduced my position max loss to ($150) as a trade drawdown / stop analysis of my recent trades using these parameters shows that there is no point in any position being held past a -($150) loss or even -$(100) for that matter, but I am giving it a bit of room (I'm trading micros, initiating with 1 or 2 and max of 12 on a trade).

As far as the DLL, I would have been profitable on a net basis on the month so far if each of those three DLLs had been - 6 pts vs the current total of - 31 pts before reducing it. The total loss for the month would be almost half of what it is now.

Even though I've been trading going on for 4 - 5 years, this week it really hit home. Maybe because now I am feeling very good about my trading expectancy, I can assimilate the fact that controlling loss days is not some hypothetical that doesn't actually work out no matter what I do. So instead of feeling really down when I quit on the day because deep down I know it's just going to keep going down no matter what, right now I feel really good. My edge is minimal on a day like today (CPI / FOMC). It could have gone in my direction but I got it wrong and it stopped early into the losses. When I get it right, which is more often than not on regular days, then I can keep going. When I get it wrong, like today, I get stopped early into it. Seems like a no-brainer.

As to how I got to my DLL:

1. I don't normally trade before 6:40 AM PST. I have a lock on my platform. I made an exception today in case it went to an extreme on the news release.

2. It went to the extreme of my range, but the news was surprisingly good, so I didn't short it. WRONG!

3. I scoped out possibilities and even though I was originally only going to trade the extremes, I started looking at the 61.8 fib retrace on the move up, which coincided nicely with VWAP. I thought "Every retail trader is thinking the same thing, so this is not a good trade." Nevertheless, within 10 minutes I took it. WRONG!

4. I scale into positions when I have a good idea of my ranges, but today is CPI and I scaled in nevertheless. WRONG!

5. I pulled my stop to give it more room. WRONG!

6. My max loss on any position cut #5 short.

7. After all that, the only trades I thought would be worth pursuing would be flush down failed breakout level recaptures: 4127, 4118, 4093. But instead of waiting for one of those (like the one we got on 4127), I went for a 4 lot level to level trade, increasing size to quickly make back my losses. WRONG!

This is why we have daily loss limits (and journals to keep us busy afterward).

Did not trade very well today. Front running my own levels to my detriment, second-guessing long entries. Stopped short of my DLL at -5pts on the day. Grind-up trend days are not my favorite. Gonna leave it here otherwise it's probably just going to be a final push to my DLL.

bwolf 

Did not trade very well today. Front running my own levels to my detriment, second-guessing long entries. Stopped short of my DLL at -5pts on the day. Grind-up trend days are not my favorite. Gonna leave it here otherwise it's probably just going to be a final push to my DLL.

Not sure, if you follow market profile. But usually when we open in value like yesterday, it takes a while to determine who is in charge. I usually give the market 30 mins to let the bulls & bears slug it out & then go with the winner. If we open outside the value , there are usually some trades at the open.
It usually comes down to integrity on taking the Daily loss limit, I am still working on mine. Good to see you are doing well on it.

kashmiami 

Not sure, if you follow market profile. But usually when we open in value like yesterday, it takes a while to determine who is in charge. I usually give the market 30 mins to let the bulls & bears slug it out & then go with the winner. If we open outside the value , there are usually some trades at the open. It usually comes down to integrity on taking the Daily loss limit, I am still working on mine. Good to see you are doing well on it.

Thanks for the feedback, Kashmiami.

When I'm really thorough I do my own long/ short assessment matrix, which I put together to help stay on the right side of things. Often I don't do it nowadays, but it's a good thing to do and it helps. I also have a pre-market prep process that addresses these things (i.e., ON inventory relative to daily & weekly pivot; ON % net long/ short relative to pClose & position in ON range), but I am human and so it doesn't always compute through and through. Similarly, I map VIX volatility boundaries (using VIX rule of 16) and I'm careful trading against the VIX if it's more than 3% up or down and over the boundaries (recent example below). But I did yesterday and the move up was relentless. I made a note to avoid trading against it, period. As far as what goes into what I do, some of the stuff and systems that form part of my background you can see on this list, which is not up to date, in case you're interested.

https://docs.google.com/document/d/1qA2j8__qpu-zJAl71PsZ0ThbutkZfWYqB7oMTPwBL-A/edit?usp=sharing

Hope you have a great day trading today!

Better than the last 2 days just P&L -wise. I'm still working very small, with micros. This is not going to get me through a $9K eval profit target soon, but right now it's not that important. Much more than P&L, some things I am working on are going much, much better. Risk management stuff and also strategy stuff. Some small errors that cost today on that front, but it was very close and I see it really coming together. I'll go over it this weekend when I have more time. It helps to post it here to make me go over what is working and what isn't. Okay, this one, very quickly: I got the turn at the top this morning, and I was right on it (order flow shot of my entry at the top below). And had I implemented it exactly as I should have, I would have nailed it. I got extra cautious and got stopped out because I put my stop right over the price rejector at the top vs where it should have been, on the marker over my level (i.e., just over mid-way between this and the next level up). So this particular one didn't pan out. I had a few like this. Details...

Have a great weekend!

I said yesterday that I'd touch on what went well this week, in spite of three down P&L days. I'm going to wait until the end of the month to really assess things against actual performance but will make a few quick notes to actualize thoughts I had about what went well this week (and note the fact that while I canceled one eval type - 7.5K drawdown $20K profit, for another, 5K drawdown - $9K profit, I did not blow anything up).

I think this week I turned a corner in terms of my risk management. This is THE area I have struggled with the most in my trading, as is the case with so many of us. Two or three years ago, while I was quite active on FT71's CT group, I did a deep analysis of several weeks of trading and concluded that if I could stop after two losses on any given trading day I'd have a consistent positive equity curve. But I never managed to do it. After that I continued my journey learning many facets of trading, first NQ then ES.

Back when I started, before CT, I went from a pure price action model based on a tight RR system that should in principle work (Tony Rago NQ), but with no clue about market context, order flow, and so many other things, I was not able to make it work. I joined CT and learned about volume profile (as well as others I read on market profile, i.e., Steidlemayer, Dalton). I had joined Al Brooks' trading room before that and did his course and read his books, I eventually studied with TRG (order flow) and so many others (I posted a link to all that stuff yesterday). In other words, I did what Mark Douglas tells us everybody does, which is to learn ever more about trading in order to BE RIGHT EVERY TIME (on every trade, the next trade, etc.), and it never worked. I never fundamentally got probabilistic thinking or was not able to work it out in my trading at any rate.

I do know a fair amount about how to trade at this point, but I was not able to manage myself. I am a perfectionist, so I can get successive days of 80% / 90% win rate, but then one day that decimates everything. I tried the platform add-ons to rein in my suicidal moves, but always found some way around them, and was never able to fully lock everything down (or just never fully set my mind and heart to it) so it wouldn't create perverse incentives. I mentioned one in the recent discipline issues thread in the psychology section of this site. It relates to turning off NT8 completely with no stop in the market to get around Guardian Angel Trader risk management and lockout:

Discipline problems One additional thing I didn't add here, for those who trade funded accounts and really want to make this airtight: If you use Guardian Angel Trader (or whatever for NT8) you need to set a max loss in Rithmic as well, have Rithmic locked with Cold …

Over the last couple of weeks, after a continuing (never-ending) pattern of evaluation resets that I've touched on here before, I finally locked it all down with my Guadian Angel Trader settings below. Everything. I talk about how to do that in the thread above. There are no more loopholes (2 PCs, 2 laptops, one virtual computer, and my Android). I'm not going to repeat it all here, it's in that thread, but everything is locked down and with Rithmic locked down and the max loss set in there, even if I shut down NT8, it will close positions with a $400 max loss. In the past one of the problems was that I thought I had to have Rithmic open to trade Apex on NT8, and I did because I mistakenly had it set to plugin mode. Not anymore. It's even better than telling your broker to enforce a DLL because the truth is that in the past I would just call the broker up and tell them to remove it, which they cannot refuse to do. They just tell you they will stop doing it if you keep calling to remove it and on those days, I would be like "Okay, fine!"

Getting everything locked down has been a huge relief. However, doing this challenges my usual way of trading. Normally, I have a lot more room to get it right. I can have much deeper drawdowns and most of the time I come back roaring. As we know, this is not sustainable as there is always that one time that it goes roaring into deep loss territory. With evaluations this quickly leads to that "all-in" point of no return. So now, working with a slimmer DLL margin, I have a couple of choices: a) I get one right out the gate and give myself room to maneuver based on realized P&L plus drawdown available. Thus, if it's a good day, I continue and make it a great day. On the other hand, if I get it wrong I only have a couple of tries before I hit my DLL and this is deeply frustrating. But the DLL is relatively small (6% of my total drawdown, say $5K as of now, so $300) and I can start again the next day. Or b) I start really small to warm up and earn the right to size up as things unfold profitably. With the current size DLL that means starting with one micro, then two, three, and rarely much more, although I have it set to give me up to 12 to work with. I think this method is better. It's like a reverse Martingale approach (i.e., size up as you get more profitable, size down as you lose). So that's what I"m working on right now. Eventually, depending on how the math works out, I may be able to size up a bit more. But the truth is that with a $5K drawdown, we are really talking about a $5K account and, realistically, long term, with the understanding that any system no matter how good will get successive losing days, the only way to make it viable is to work within the 6% max daily loss framework. I am not interested in gaming evaluations. I am interested in long-term profitability. Be it "prop" or a cash account.

The other thing I did was to reduce my daily loss limit (DLL). Over the last two weeks, it really hit home that the amount I allow myself to lose on a given day is going to drive how much risk I am going to take to make it up. If I set my DLL too high it gives me more room to maneuver, but I am deluding myself as far as how it will impact me. I am not really helping myself with a DLL at all, I am just telling myself I have a DLL in place, but I am not really accepting the premise of a DLL. I just want a large DLL to give me room to get back to even and if I do hit the DLL then I am totally bent out of shape because now it has created a bigger dent in my drawdown than I can bear. So I never really accepted it in the first place. I was just giving myself the illusion of having a DLL. The only way I can accept the DLL is if I treat it the same way I do my trade sizing in order for it to be really effective, and that is, as Al Brooks puts it, to trade "I don't care size." So I have to have an "I don't care DLL". Accordingly, I reduced it 3x, from 15 pts to 10 pts to 6 pts. The challenge that arises is what I mention above, which is now I have to be very strategic in how I approach my trade sizing and money management within these new confines. What I am finding is that it forces me to be more careful and also to adopt a more systematic mindset, accepting that there are days when I am just wrong and will be out sooner and more days (I hope, and think it the case) when I am right and that on balance I will come out ahead. It does make for more loss days overall, but always small losses versus fewer loss days overall that are blowout days when they happen. Really, and most importantly, all I have control over is my losses, and if I always keep them small the rest will take care of itself.

I remember Peter Rezniceck talking about this. He says he doesn't really pay attention to wins. Winning is easy when it happens. So it takes care of itself. All that matters is controlling losses. We have heard this over and over and over. I have at any rate. I mean, it's such a cliché. And yet, and yet...

The other part of all this relates to how I have been handling the days when I craved to go back in but couldn't. In the same discipline thread above, I touched on the discovery of hypnosis. After that, I tried a few and for the most part, found them to be unhelpful. But I landed on one that has been surprisingly effective. I think, I dare say, I have been getting hypnotized! lol. I've been using it to wind down, been doing it just to relax, and earlier this week, one day that I felt particularly bad after a small loss day (very strange how I could feel so terrible, even worse in some ways than days I had bigger losses because on those days I can get very philosophical about it), I did a quick 11-minute session and came out of it feeling completely fine. It's something I will be pursuing more. This is the one that works for me (no affiliation whatsoever): https://browninghypnotherapy.com/free-audio/

Those are my thoughts ending this week of April in the year 2023.