Number 1s Trading Journal

May 8th, 2019, 04:06 PM

Hello everyone,
I've been an member of BMT for a number of years and so far used it to read, study, learn and grow about trading here.

I read what Big Mike had to say about Trading Journal and I decided that to be honest with myself, I've to hold myself accountable and take responsibility. This forum is a good way to do that and I feel this is the best way forward. You see I can keep on doing what I've been doing, keep breaking my own rules and not hold myself accountable. But it won't lead to steady, consistent higher equity highs. I hope this will not only benefit me but also any one else who's struggling particularly in the area of trading psychology and self-discipline.

I use a few strategies pertaining to VWAP and Peak Volume price(anyone have heard about Zunaa?) along with trend lines from higher time frames. I'm still learning a few things related to Fibs, Candlestick Patterns, etc. I've been doing a lot manual back testing(this helps me internalize whatever I'm after better) and hope to do auto-back testing of 'time of the day' concept since I've found it to be very, very powerful in catching decent sized swings. Sometimes it feels like clockwork and easy.

My number 1 issue is OVER TRADING. Over trading not in terms over-leveraging, but taking too many trades, sometimes breaking my rules, and more importantly I MUST find a way to stop when I hit my target RANGE of profit for the day. I used to have daily goals but realized all it did was creating stress. So I developed a weekly goal with a minimum and maximum and as the week progresses I know overall whether I'm closer or falling behind. I must find a way to stop trading for the day when I hit my goal or when I complete placing X number of trades.

I don't break my rules related to risk management and position sizing.

I welcome anyone who can share how they overcame their issue related to taking too many trades.
Here are my questions for active day traders:
a)On an average how many trades you take per day?
b)Do you stop taking trades, regardless of market conditions when you hit your goal?
c)Do you become inactive certain times of the trading day For example, between 3-30 and 4(give or take a few minutes), I find that a very good swing commences and generally profitable.
d)Do you actively keep a trading journal?(I've studied four or five different journal software and on the verge of buying one). I have realized I need to spend a bit more time analyzing my performance and reduce a lot of trades I've been taking so I pay less commissions and also become responsible.

I trade ES(sometimes YM and NQ if conditions aren't met in ES), Euro Fx,, Gold and sometimes Crude Oil for intra-day. Occassionally I might take a day trade if there's something I see on daily chart in Grains, Currencies, Metals, etc. Time is at a premium, so I tend to minimize workload after trading hours.

I intend to post charts and trades I take whenever time permits. I hope you join me on this journey and ruthlessly point to any mistakes I make so that I can correct them.
(Planet Moto, Paps, Rahul, Bbsky, Harverster I hope you are active on this forum).

Thank you Mike for this Forum.
Number 1

May 8th, 2019, 06:13 PM

Three questions:

1. How do you know you are over trading?
2. Why are you over trading?
3. Why are you breaking your rules? Why did you create them?

I can tell you that there are 4 factors that define frequency:

1. Opportunity. The more of this the more frequently you can trade. You might use the ATR as a proxy for opportunity.
2. Selectivity, quality, or edge. The higher you make this the lower your frequency.
3. Risk per trade or standard deviation. The lower you make this the higher your frequency.
4. Cost per trade. The higher this is then the higher you higher trade quality to overcome costs thus the lower frequency should be. With lower frequency means you will likely need to increase #3.

Your conflict is probably desire to constraint optimize this space and rigid rules that don't account for changing conditions. As well, you may have a psychological problems outside of that. If you have edge, you should want to take as many trades as possible that satisfy your requirements.

As for how many trades per day, I think it is hard to say. However, I found when I was higher frequency scalping (a tryout), if my expense ratio went 55% my profits then I found that level good indicator for me to shut down because it would be hard for me to push my net up even if I pushed my gross up. At that time, very volatile conditions, I recall the average frequency being around 30 trades per day. However, I was not being selective enough. I was trading ES almost exclusively.

Mathematically if we define your opportunity in terms of holding time and you hold for 10 minutes and you take only the top 25% of 10 minute periods and you trade from 9:30 AM to 12:00 PM, you get about 4 trades per day per instrument. However, you could define your opportunity in terms of swings then you get a lot more trades especially when it is volatile though this is constrained because the market is moving faster.

I think targeting around 4 trades per day makes sense because it is enough trades to hit a profit target and still you aren't concentrating your risk on a single trade. I would say a reasonable target is 1 to 4 trades per day but you might let it vary from to 1 to 8 trades esp if some are scalp entries.

This doesn't mean it is the "right" answer. The ES made approximately 22 swings today of 30 points. Let's say you could traded the best 15%-20% of those swings, it yields around 3-4 trades.

May 8th, 2019, 10:29 PM

Hello,
Thank you for taking the time to read what I wrote and respond in detail. Lot of insights in your answer and I intend to read it a few more times. Often I feel I hit my goal early in the day and later I tend to push it harder and it becomes marginal at best leading to small losses. I know that if I can find a way to curb my number of trades I will be fine.

I went through Trading in the zone book and tapes as well Lanny Bassham's book With Winning In Mind(amazing book and a must for everyone whether trading or not) and came up with a rehearsal program to practice it in Alpha so it becomes effortless at the conscious level. Will have to be patient for a few weeks but be consistent in practicing it.
Thank you once agan
Number 1

May 20th, 2019, 02:49 PM

TP,
I went over your post a few times. If I were to consider say a maximum of 4 trades per day in ES, to get a decent chunk of each swing, would it make sense to look at the time frame closely? Right now I trade using the 2 min chart for Indices.
Or would you say, it doesn't matter as long as it's 5 minutes or less?
Thank You

I've been taking trades in slower smaller contracts in real accounts while I keep Ninja open for micro ES simulation only for now. Will begin posting my trades soon. It's been busy.

Number 1s Trading Journal

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