Beautiful Scalper

[BeautifulStranger]

Between working all night and little sleep in two days, I took few trades today. Caught up on some sleep today, though.

T1 - Bought ES ‘fly based on Destriero’s idea, not my own. For overnight option spreads, I want to be trading with the “Long term” trend. For my purposes, a long term trend is defined by the relationship between the prior week’s bar and the bar before that. By that definition, we are still in an uptrend. Closed position on ideas that we are in consolidation mode with today’s narrow range bar relative to previous average daily ranges. I suspect we will be down tomorrow in another consolidation bar on the daily. If the market does not unravel, I will look for bullish option strategies on single names near the close of Wednesday and Thursday morning.

T2 - Partial delta hedge of my options position.

I expect my scalping / day trading to become more active tonight and tomorrow, with an emphasis on trend and or trading range scalps as opposed to reversion to mean scalps.

 

[BeautifulStranger]

Mostly work and sleep. Did fire off another partially hedge ES ‘Fly. At this point, it seems safe to say we will visit 3000. I will look to close the hedge and maybe even turn the ‘fly into a vertical spread and utilize a stop.

Definitely will have more time to trade tomorrow.

 

[BeautifulStranger]

Between fighting my platform, making several mechanical mistakes (Again), and feeling other than well, I managed to turn what should have been an easy winning day into a loser.

The causes of this sub performance I believe are as follows:

1. Caffeine withdrawl. I had been drinking a lot of coffee to stay awake for work, against my normal sleeping schedule.

2. Possibly related to above, lack of intensity is causing me to repeat mistakes and to hesitate when making decisions.

As a result of continued mistakes and continued poor trading performance, I will stop trading real money and fulfill the following conditions before trading again:

1. Lose 6 lbs and get better athletically conditioned.

2. On sim trading, increase my account 20% through scalping and day trading. I don’t love simulated trading, but I should loosen up after taking every signal and absolutely not caring about the outcome. As a further benefit, greatly increasing the frequency of my trading should help me eliminate or at least substantially reduce mechanical mistakes. Additionally, I may more quickly learn some new nuances to my trading strategy through higher frequency than what would be seen in a live account.

3. Make no mechanical mistakes for at least two weeks prior to restarting live trading.

4. Have an additional account funded as a specifically designated options strategy account.


Additionally, I will add funds sufficient to bring up the account used for this journal back to it’s original starting value of $30k. I will then base future account performance reports in that account to reflect the fact it will be used for scalping and day trading exclusively.

In any event, no live trading earlier than July 1, 2020.

If I blow up my paper trading account, defined as losing 20% of starting equity or allow a position against me more than 3% of account value, I will suspend paper trading for a minimum of three months.

I will post my profit and loss and trade summary of my paper trading account here.

 

[BeautifulStranger]

Very productive trading related weekend. I’ve found I do my best trading when the market is closed!

Received validation on some of my trading ideas and more importantly, much more importantly, was my listening to a free audio book, Trading in the Zone by Mark Douglas, a world class book on trading psychology, link provided below. Every second of this 8 hour audio book is worth listing to several times for traders who have not yet achieved a fairly smooth and consistently rising equity curve. Don’t forget to take notes, if you are not familiar with this publication. Mark Douglas specifically discusses the causes of trader underperformance and shows a way how one can modify their behavior in order to reach their trading goals, or even other life goals. This work on trading and psychology is comparable, in my opinion, to other ledgendary works in history such as Einstein and his Theory of Relativity and the works of Shakespeare. I will extensively utilize Mark Douglas’s advice in my trading going forward, and will document such in this journal.

I’ve done some live trading tonight and will continue with my earlier plan to trade at a higher frequency with a simulated account except I will now use my live account instead.

 

[BeautifulStranger]

Not much done today tradingwise.

Trades 1 to 4 - Traded according to short term technicals. Did not realize Monday was a US holiday. Got to get on the ball and look up and track exchange holidays, etc., before placing trades.

Trade 5 - Bearish directional ‘fly. Felt the market had gone up too fast, even though I thought ES 3000 was going to be hit this week. As soon as I end this form of self-sabotage, I probably reach consistent profitability. I will work on my psychological issues every day by incorporating the suggestions in Trading in the Zone. I ended up taking on more risk as the market went against me by buying back the short puts of the ‘Fly. I closed out the long put legs this evening for a modest profit overall on the trade.

Trade 6 - Bought silver on alternative monetary asset price continuation ideas. Closed on weak relative strength. What can I say, 4 minutes in a trade seems like a long time to me. As it turned out, It would have been a great short entry. I need to remind myself to try to entertain someone else’s thesis when a market does not perform as expected and take action, especially when PA reverses. Long silver could safely be considered a crowded trade with momentum oriented longs at the time. Make price action my friend.

Noticed IB’s TWS VWAP and moving average does not scale properly as prices update on small charts. My adjustment is to reduce the number of charts on each tab, eliminate these indicators on small charts, and to have a large chart linked to a watchlist that has the desired indicators. Actually, it probably would not hurt to eliminate the moving average anyway.



For an unknown reason, I am unable to copy and paste a screenshot of my PnL and trades here. Will try again later.

 

[BeautifulStranger]

 

[BeautifulStranger]

Account value hit new low since inception on my failure to respond to changing market conditions. I’m better off to admit I know nothing, never knew anything, and will never know anything. Except, perhaps, identifying which direction a trend is going. If not, maybe a friend will let me hire their six year old for help.

Trade 1 - Shorted MAR on ideas the Hospitality industry is vulnerable to profit taking due to the recent strong runup. However, the general market sold off and MAR displayed persistent relative strength not just against the market, but its competitors as well.

Trade 2 - Looked like MAR was finally getting ready to roll, but there was still underlying demand.

Trade 3 - Went long bearish ES put ‘fly. Chased this entry because of major risk off indications in correlated assets. Had the idea NQ and ES would test their weekly low. After being up $300 or so, ES reversed and took out it’s high on the close, leaving and open loss of $300 plus and a negative theta. I will have to exit this spread tomorrow if the market offers no encouragement.

Trades 4 and 5 - Quick reversion to mean scalps as a partial, short term hedge against my ‘fly.

Trades 6 to 10 - Reversion to mean scalps that were not part of a hedge. Trade 10 is still open. I missed my exit by one tick. So much for being slow and stubborn.

It amazes me the power of denial. I remember saying to myself “This is a prime setup” (For a buy), well before the close. In my (Weak) defense, there were other reasons for my short biased directional confidence, but if the market is not cooperationg, what value is that? Besides, don’t market makers have unlimited, Fed granted liquidity at their disposal?

For trades starting tomorrow, I will record my thesis of the trade, my stop, target, and exit as well as reasons for choosing those points. I will be more detailed in my closed trade evaluations, especially from a maximizing per trade profits and increasing capital utilization. I can safely increase account utilization when following confirmed trends, especially like the one Wednesday afternoon.

 

[777]

Thank you for your detailed and thoughful reply.

Probably the best attitude for me to take is that I'll always be an neophyte, regardless of my experience and performance, to help me keep an open mind to new techniques and changes in market conditions.

Another consideration is to address my commitment level for this type of trading. Spending 5 years of time or more learning something without pay, or more likely, negative pay and forgoing earning "easy" money as most any job clearly makes the expectancy of scalping a negative expectation for new traders in general.

Perhaps even ultimately successful traders may look back and question if there would not have been a better path towards success and overall satisfaction with life choices.

Most of my trading experience is low frequency, although I have had some success in short term fades of extremes in order flow. Due to a recent "Ah ha" moment where answers to many of my long standing questions about trading were indirectly answered after reading another's post, I became inspired to test these new ideas.

Although it may not seem reasonable to most, my expectation for being becoming reliably profitable in scalping is 4 weeks, assuming my inspirational moment and newly gained knowledge have sufficient validity. I can handle a 4 week investment of time and my current earnings power can readily replace losses in risk capital. Even if this venture is not successful, if I add to my knowledge than can reduce bad entries for longer term positions, a net gain may still be realized with this new venture.

I want the pain or the potential pain of financial losses and posting negative results to help keep my trading discipline and wait for higher probability setups rather than getting bored and taking less quality, variance increasing setups.

If my expectation of profitably scalping is not met, I will move on and focus on other areas of trading such as swing trading options spreads.

One of your key goals should be to develop a personal relationship with someone who currently makes a living day trading-- mentorship.

Extremely ard to do.

Pass on gurus-for-hire.
________

Also. you should absolutely read Traders of The New Era.

There are many reasons, but for one, you truly will have a better idea of what you are up against.

Best wishes.