Friday, November 7, 2008

Good news and bad news

Bad news is that I lost today, good news is that I was disciplined and trading inside of set rules.

Just when I wrote this I broke my rules by having one more trade in which I get punished very, very fast. Still I'm going to stay with headline and will not kick myself over that. Before that last trade I was -18 full size pips and now -30 full size pips. The thing that I recognize now that it's important to accept the rules and that I broke them but that I'm not going now on revenge mission throwing all away.

OK, I had this triangle drawn, but I have something against TA because when it start to go as it suppose to I don't believe it. So I didn't short the brake, but I said to myself I will short the test of the line. But to get it short price got to go up there, so let's have a long scalp up to that line. Well as you can see my logic doesn't have firm foundation in this case. To make things worse, I lost all perspective of broken triangle and what is going on, I was just reversing my trades as momentum dictated me. But that whipsawed me a lot. Red lines are losing trades and blue is winning.
So that all eur/usd was half size and was in boundaries of my plan with -18.
Than I put momentum long on gbp/usd and got a nice loser very fast. Well I'm glad, because that trade didn't have a room to be put on with 4 pips spread on gbp/usd, I was breaking my trading plan. Better that I got punished than rewarded on that.

The best thing is that I recognize broken rules and will not now make things worse. That is nice rule also.
I kept cool and I like that.

In day like today when I trade really wrong it's great that I have decision of closing all when I lose my 40 half size chips. There is far more probability that I can do bigger damage than remedy things if I keep trading.
Also I can see that I feel pretty ok when I lose small half size trades and that I should go for more opportunities. Not only like today when I got stuck in bad mind frame to trade so much.



you said...

"There is far more probability that I can do bigger damage than remedy things if I keep trading."

The first words that came to my mind were "I agree, if you keep chasing the price." How is price supposed to move in your favor if you keep walking right behind it?

When you chase the price by moving your entries, you are eating potential profits. I believe that right now 20 pips is 1% for you. I am currently trading 10 pips for 1%

If you look at your charts, using your long entry and a 5 pip range you would have taken maybe 5 losses (a 1.25% loss) and remained short to get a profit.

I like to trade triangles/wedges as well, but I wait until prices get very narrow to even think about putting on a position. Yes hindsight is perfect, but after that clear breakdown I would have been looking to short. I will e-mail you the manual when I am finished. I don't know how much it will help you, but I would appreciate some feedback from it.

As always, I know you have your own thing and I can't change that. I just want you to try and see what I see. Things like, having a 20 pip stop when prices are only moving in 5-7 pip channels is slowing your profit potential big time. If you have along or short bias, DON'T MOVE YOUR ENTRY, wait for price to show you that you are right.

You can be a profitable trader by what I am telling you my friend. I know because I am up 25.9% this week. The casino is a winner.

FX said...

You have valid point in all what you said about chasing price. In the end that was what I did today when I look at it now. While I was trading I expected fast and big move on one side or another but there was no momentum behind my trades just a whipsaw losses.
Well I was looking to go short as well in the first place but I somehow lost myself in the chase. So it was poor performance. When it didn't go to test trendline I don't know why I still chase it to the upside. I just lost contact with what I wanted to do.

This could be much better and it just wasn't good enough. But I'm ok with that as long as I stick to my trading plan. I can have bad trades, bad days, no problem, I'm fine with that. So now I want to trade a plan, that is far more important then profitability of the day for me.

You are doing great stuff with your casino system. I was thinking about it. That way of trading up or down from a small range can be put anywhere in chart. I believe that there is no magic with US open or any other time for it. Maybe the best place would be around the point that is expected that there will be acceleration on one side or another. All that were thoughts for me and how would I use your casino concept of trading.

25.9% in a week is sick :D


I have not been so much trading the open lately, just waiting for price to get near support or resistance. If it has come down to support, I generally have a short bias and for resistance I have a long bias. It all depends on the distance between the two though. if I'm looking on the 5-min and its 50-80 pips between the two, I will establish the zone with no directional bias. If the range between support and resistance is smaller like 30 pips I will have directional biases beyond that range. It keeps the whipsawing down and usually results in a much more accurate entry.

You know how it is though, watching price action may give me an exception, so its all about whats happening at the moment.

If prices are nearing a bottom and slowly ticking down 1 or two pips and then lashing back 5-6 pips with strong buying action, I will be more likely to want to go long.

I have learned much better now to pay attention to how quickly price is moving and get insights from it.

Just stay the coarse and accept your small losses. and no matter how tempted you are, don't move stops. And remember, be patient and wait for the best time to strike.

I have learned its best to establish the zone after a long period of channeling/choppy market action, because after all that crap, price has probably decided on a firm direction. Just stick with your rules, but make sure that your rules are defined in a way that you have no choice but to profit in the long run ;)) Have a good weekend buddy.

FX said...

So I see, you moved away from same time every day to important point by your judgment. Than you use your strategy as before. When I look to what have I done today, it's just that, firing up and down. I can do it easily. But your way with tight range is far superior stuff because you have good reference point. Well it looks to me that I'm closer and closer to your casino. I even started to call my available s/l points in a day as casino chips.

I do like my discretionary trading decisions and that's why I didn't like the point of trading always at the same time, same 5 pip range in your method. But as trading technique that I can use after that important point where I decided to enter it has far more appeal.

Only thing is in number of potential losses that I would want to restrict somehow when using that method.


I know what you mean about the potential losses. I was trading 2% risk per 5 pips and looking to only bag 1R, I still do that sometimes it depends, but for now I realize that if I use 1% risk my goal is 2R and .5% risk my goal is 4R. Today I had two 1R losses and one 8R winner.

I mostly use 1% risk per R instead of the 2% because with Oanda only giving us 50:1 leverage, my position sizing would have to change frequently with losses. Trading 1%/R allows me to keep position sizing the same longer and its still not too much to ask for a 2R return with such a small zone.

I still think trading the open is the best starting time, because new traders are piling in looking for the market to move big from that time. But I have become more selective about "Where" I establish the zone as described before. However, no matter what time it is, price still moves because of people, and people still react to support and resistance the same. So with that said, as long as the spread is low and the price channel is below between 5-7 pips, you could use the casino around major support or resistance and make money just about any time of the day i suppose. I just prefer to put all the odds on my side as I can when I trade.

The great thing about forex is that position sizing is extremely scalable to meet current volatility.


Whoops i hit send on accident...

I meant to say that I also stopped trailing support and resistance as a profit target and went to a simple 2% per day goal. I realized that my odds of grabbing 1-2R a day are produce similar if not better results than trailing the 5min chart.

The reason behind this is because trying to trail the 5-min chart left me whipsawed a bunch when I could have just taken the 1-2R and been done for the day. Who really NEEDS to do 50% a week??!? I realized 2% a day compounded was like 45% a month. That in itself is freaking awesome...

So anyways, my losing days are very rare as long as I stick to the method. I still make mistakes but I am getting better also.

StockHunter said...

Glad to hear your getting more disciplined in your trading (i.e. not making more trades to make up for losses). Keep up the good work!