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Feeling a little out of it this morning, which happens sometimes. I had some caffeine first thing, and I've been noticing that my body doesn't particularly like caffeine in general. Having a hard time saying goodbye to the sugar-free versions of Dr. Pepper and Commodore Cola. Anyway, that's not important. I was firing from the hip this morning trading-wise, and it shows.
I took one trade that had two entries, or that's how I think about it at least. It almost felt like the trade was cobbled together in a hurry, and not patiently planned for. Probably because I entered the trade in a hurry and didn't plan for it. The first entry didn't work out. The second entry was fine, but I didn't pay enough attention to the developing market structure, and as a result, held onto the trade longer than I should have. Whoops. If the market had been more volatile, then my losses could have been worse, and/or more plentiful, so I'm thankful that I got lucky in that regard. The market seemed to be kind of slow this morning, but my lack of mental clarity could be clouding my perspective.
A nice part about messing up this morning, was that even though I made a mistake and stayed in the trade for too long, my current methodology wasn't invalidated. In fact, things worked out in harmony with it. Will be nice to see if that holds up, as it's only really been three days of forward testing so far, which is nowhere near enough data to develop an opinion with.
I decided to mess around with the Order Entry panel in Quantower, because I wanted to see if I could make sure that my Stop-Losses were market orders and not limit orders. While I didn't figure that out, I did find that I can change the order type to market if touched, which may be fine. I want to look up exactly what that order type does though, just in case there's more involved than it sounds like.
By chance, I also found Quantower's trailing Stop-Loss function, so I'm gonna' see what documentation they have for that. It was emotionally easier to manage my Stops today than on Wednesday, and hopefully being more dispassionate in that regard will be a continuing trend, and not just a result of my mental state today.
I've been browsing some of the Journals on here, and I think it's awesome that some people are so open about their trading methods. Some people will post charts and show you exactly what they were looking at when they entered a trade, and explain why they entered where they did, and why they passed on other opportunities. I know that I haven't done any of that, so my journal isn't as helpful. At this point, my journal is basically just a whole lot of wordage, and I've been intentionally vague about a lot of things.
My main concern about sharing too many details is that if too many people start looking for what I'm looking for, and try to enter where I'm trying to enter, I may not be able to profitably utilize my strategy. That being said, my results so far may just be random luck. We'll see how things play out moving forward.
I was trying to explain what I do to my wife last night. She's very smart, and I tend to get distracted and go off on tangents about this and that, so I was trying to explain as simply as possible what I look for when I'm trading. My understanding is that when trading took place primarily on the floor, there would be some traders who could read, sometimes intuitively, everyone else's behavior. I would imagine that some people would have been able to pick up on the body language of the floor traders and use that information to help them determine how, when, or what to trade. I've read that people lost a lot of information like the above when they transitioned to screen-based trading.
Here's the theory in a nutshell. If you can read human behavior in person, like when trading pits were more active, then you can still read human behavior on a price chart. It's more difficult on a chart, because like with the written word, you lose a lot of the context that you can pick up on when you interact with someone in person. In my own experience, it is very difficult to change. It's doable, but it usually requires pain of some kind, and as @deaddog has mentioned before, people are typically pain-averse. Basically, people are going to do similar things in similar situations, and they're going to do this every day, over and over, until they change. This shows up on every chart, in every timeframe, every day.
I don't use indicators unless you count volume, and I rarely use that. I don't use trendlines. I don't use trend channels. I trade reversals, but not in a way that I've read in any trading book so far. That's not to say that someone else hasn't written about it, I just haven't come across anything that resembles what I look for yet. I just try to read the behavior of people (or their algos) in the market, as it's communicated through the intersection of price and time, and then enter a position in the implied direction of a behavioral change.
I'm not trying to reinvent the wheel, and I legit may be insane. If any of what I've said is common knowledge, then my bad. If someone else has said any of this, then the credit goes to them. Also, I'm not consistently profitable, and I only trade in SIM for now. All of this could just be cattywampus nonsense. I don't personally think that it is, but I'll find out through my PnL before too long.
This will probably be my last journal post, at least for a while. I appreciate the people who have offered feedback, the other members of NexusFi who've been so generous to everyone with their knowledge, and the people who have taken the time to read through all of this wordy and unnecessary shit.
I have wondered why you often were so reluctant to say anything about your actual trades, but of course that's up to you.
As far as your concerns about other traders catching on to what you are doing and profiting from it, and thereby reducing your profitability, I'd say, sure, that's entirely possible... if you were a well-known billion-dollar trader who everyone is interested in copying. People imitating you would certainly affect your ablity to profit, and you would have good reason to be quiet about it. For that very reason, the big traders or the major firms are not broadcasting their trades, and when you get to be that big, you shouldn't either. I assume that everyone who becomes a success figures this out, and limits what they disclose.
I'm not saying this in order to give you a hard time, just to suggest a little perspective. And with that said, people do sometimes feel they have their secret sauce that they want to keep private, and they are welcome to keep it as private as they wish. The ultimate point of a trade journal is simply to benefit the person whose journal it is. So people will talk about different things, and hopefully about those things that will help them the most, which will be different for different people.
Frankly, the things of greatest value almost never depend just on some particular method or trading technique, but are mostly about things like self-discipline, and responding to reality instead of one's desires/fears, and rational risk management, and personal psychological self-management. The method has to work too, but it's not as important as we think.
By all means, do as much or as little in your journal as you wish, or nothing. The space is here for you to put it to use, and as you have noticed, sometimes people will kick in some of their time to try to give someone a hand. Use it as you see fit, and take what you get from it, if anything. I hope you do.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
Thanks for sharing your perspective, Bob, I really appreciate it. I think you might be the kindest moderator on the internet, and I appreciate your insightfulness. While I definitely don't currently fit your description of the well-known billion-dollar trader, that description, minus the well-known part, is part of my overall goal. I'd like to do some things for people, Gary Bielfeldt style, but on a much larger scale, and that requires a lot of capital. I'm thinking ahead, maybe too far, maybe prematurely, to when I'm at the level where I have to be careful with my trading method. I don't want to accidentally (or intentionally) shoot myself in the foot now and hobble myself later. Will I be able to pull off what I want to do? I don't know. I know it's theoretically possible, and that's enough to keep me going for now.
Trading has been going well. I was initially concerned about how I like to just shut it down after I make a profitable trade, but I don't really care anymore. I like having extra time to get other non-trading related things done. I'm good with making some money and being done for the day. Small gains will add up. My losses have been alright. I have a predetermined amount that I'll risk per entry per trade, and if I get an entry signal that requires more initial risk than that amount, I just pass on the trade. Who cares? As long as people are buying and selling, there will always be opportunity.
I'm considering trading Live soon if things continue to work out. I'm not gonna' rush it though. There are still aspects of what I currently look for that I'm learning about.
I've been interested in looking at the Tao Te Ching lately. I couldn't find our copy, so I looked up some Laozi quotes instead. Kind of like the cliffnotes version of the Tao. I've been slowly getting reacquainted with Alan Watts too. I also accidentally found out about a dude named Miyamoto Musashi, and I resonate with what I've learned so far. He was a Japanese samurai philosopher, if I'm remembering right. It feels fulfilling to have an element of spirituality in my life, which is an element that's been lacking for a long time. Enjoying it so far. Looking forward to the journey and the outcome.
The plan for this week is to do the same things that I did last week and learn as much as I can along the way. It's weird. I feel like I'm arriving at the "trading should be boring" Airbnb. In the morning I do "x." Then I wait for "y" to happen. If "y" happens, then I do "z." It either works out or it doesn't, and then I either stop trading for the day, or wait for the next "y." I had been wanting to feel the emotional surge of being in a trade that suddenly blasts off in your favor. That happened the other day, and I felt close to nothing. Weird, but good maybe? It's working for me and that's enough.
Loss of ($4.99) on the day. Have been having a hard time waking up today and took a long really close to a ceiling. I was kind of aware that that wasn't a good idea, and I'm thankful that the loss wasn't more significant. My diet will be changing (and already has changed some) a bit as a trial run, and I'll try to keep track of my mental clarity to see how I respond to different foods. I'm going to try to keep track of how I feel when I wake up, in combo with what I ate the day/night before as well.
Edit: Found our copy of the Tao Te Ching. It was hidden among the cookbooks.
Loss of ($11.24) today. One trade, one entry. Shorted too close to a potential floor, and potentially misread a chart pattern. It'll be hard to know for sure until I review pattern examples and compare them with today's price action. So far, except when I trade at the wrong times, my method is keeping me from taking bad trades. When I don't listen to the rules, I lose money. That's not to say that I don't lose money when I do listen to the rules, it's just that I've been losing less, in general and profit-wise.
Part of my problem is definitely self-discipline. I think the process, at least with my current problem, is: Boredom>Thinking about why I need to succeed>Pressure>Emotionally off center>Anxious impatience>Trade with poor potential R:R forms>"Rationalize" entering the trade with FOMO as a partial driver>Know that I shouldn't do it>Do it anyway.
I'm not sure if I can fix the "boredom" part, because if I entertain myself while I'm waiting for a setup to form then I might get too distracted. I might be able to work on the thinking about the "why I need to succeed" part by trying to push those thoughts away until later when I'm not trading. It can be a pretty quick transition from "why I need to succeed" to "pressure" though, so I think I need to spend some time coming up with some grounding ideas that work for me. Maybe have a list of quotes that trigger an emotional response on my desk, that way I can interrupt the emotion(s) and thoughts that I don't want to have, and then rebalance.
Edit: I'm going to experiment with only looking to enter trades if the distance between the floor and the ceiling is wide enough. To further refine that, the entry signal will have to form with, at minimum, a potential R:R of 1:1. 1:1 is not the goal, it's just going to be a base requirement.
If the distance between the floor and the ceiling is too small, I'll pass on the trade. If the distance between the floor and the ceiling is wide enough, but the location of the entry signal skews the potential risk-to-reward to where the risk is greater than the reward, I'll pass on the trade. If the distance between the floor and the ceiling is wide enough, and the location of the entry signal skews the potential risk-to-reward to where the reward is greater than or equal to the risk, then I'll enter the trade.
I've noticed that my best trades so far have happened when the range between supply and demand has been larger, with one exception. That exception being when the range expanded very rapidly, with what appeared to be minimal interaction with prior price levels. I suspect this is because when price moves relatively slow, the people that don't use hard Stop-Losses have more time to think about whether or not to exit their trade if their trade isn't working out. However, if price zooms in one direction or the other very rapidly, those people don't have a whole lot of time to think before their opportunity to exit for a small loss passes them by. This traps them if they don't exit. Might not be like that at all. Just speculating.
So, I didn't adjust my supply and demand zones correctly with that trade. Also, when I say "supply" and "demand," I'm not talking about the concepts that Sam Seiden went on about. As far as I know that dude got busted for fraud, so I'd be wary of any of his methods.
