Birth of a trader

[frank8800]

Just a quick update on what I've been up to.

I was out of town on Monday, and yesterday I had to deal with a plumbing problem.

Today has been spent doing sim on the days I missed. I do a lot better in sim than live, so I think this is telling me I still have some fear issues. There was a thread by Lescor where he said to let go of the money thing and just trade. Easier said than done for me. Reminds me of the book Enders Game.

My plan for the holiday break is to get methodical with my trading plan. I'm seeing a lack of focus and follow through in some areas, maybe trying to trade too many setups because I'm impatient.

January will mark 1 year that I've been trading full time, and my account is almost exactly where it was 11 1/2 months ago. Right now I'm feeling what I'm sure a lot of people feel - so close yet so far. Plowing through this alone is difficult, but maybe that's the best way.

 

[DoubleTop]

You should hang in there! As you said looking back is always 20/20. I would learn as much as you can about price action and supply/demand zones. I'm starting right there with you too. However, since I've been studying this price action thing. I have seen small losses, small gains, and HUGE gains. I think that's the only way we can be profitable in this business. I personally believe in locking in profits as soon as price moves in your direction a little. Gotta protect your capital. Have you checked out that information that I linked to you a few days ago? Best of luck and happy Thanksgiving!

 

[frank8800]

Quote from glbrent:

You should hang in there! As you said looking back is always 20/20. I would learn as much as you can about price action and supply/demand zones. I'm starting right there with you too. However, since I've been studying this price action thing. I have seen small losses, small gains, and HUGE gains. I think that's the only way we can be profitable in this business. I personally believe in locking in profits as soon as price moves in your direction a little. Gotta protect your capital. Have you checked out that information that I linked to you a few days ago? Best of luck and happy Thanksgiving!

Oh, I'm not giving up. I'm still putting in many, many hours per day on this.

I have been working through those videos, and some I've found very helpful. One thing I noticed about my trading was that sometimes I would take a setup that was in the middle of a range, then usually get stopped out, or BE+1 if I was quick. So that material has helped me pay more attention to the overall price and where it's been and likely to go, and not just focus on set ups.

At ammo's suggestion, I had been manually plotting Market Profile graphs, so now I can do it, but I haven't been able to make use of the info. I have some books on the shelf waiting to be read on the subject, but haven't gotten around to it yet.

 

[NoDoji]

Quote from glbrent:

I personally believe in locking in profits as soon as price moves in your direction a little.

How is that working for you? What do you consider "a little"? I've tended to lock in break even too soon instead of trusting my stops and targets and have given up more than I've conserved by doing that, because often price suddenly runs and there's no time to get back in at a similar entry price once stopped out at b/e.

More recently I've been working on leaving my initial stop in place until at least 10 ticks in my favor (and even then it's often too soon to move the stop). On Wednesday for example I was in a CL trade that moved 7 ticks in my favor right away, then came all the way back to my entry, and into the red, where it came within 1 tick of my stop loss and then stalled in a narrow range for nearly 10 minutes. I stayed in the trade with my initial stop in place. When price finally moved back to my entry it suddenly jumped, meaning if I'd been stopped out b/e and wanted back in, I would've given up at least 5 or 6 ticks. Price worked its way through my initial target and I was able to lock that in on the retrace off the pivot low.

It's still a difficult decision for me. I always think I can time a re-entry if stopped out b/e by just a few ticks, but too often price just runs at that point.

 

[Redneck]

Quote from NoDoji:

I always think I can time a re-entry if stopped out b/e by just a few ticks, but too often price just runs at that point.

I recall a saying – Price runs the fastest with the fewest on board



It’s one of the games repeatedly played;

Shake the weak (most) traders out, move price quickly, watch them scramble and pile back in – wash, rinse, repeat


It’s a great way to take advantage of weak hands (weak not having anything to do with the amount of capital one is trading in this case)


RN

 

[NoDoji]

Quote from Redneck:

I recall a saying – Price runs the fastest with the fewest on board



It’s one of the games repeatedly played;

Shake the weak (most) traders out, move price quickly, watch them scramble and pile back in – wash, rinse, repeat


It’s a great way to take advantage of weak hands (weak not having anything to do with the amount of capital one is trading in this case)


RN

I have to agree. When I put on the trade, I've accepted the cost of admission and unless the trade was speculative in the first place, such as a counter-trend or pure momentum play, I think it's best to leave that initial stop in place until price gets somewhere in the vicinity of the profit target.

Something else I've done a bit of lately is foregoing the initial entry trigger, waiting for the shake-out move and using a limit order to get in at the stop run. That tends to work in early trend reversal zones. Once a trend is well underway, forget it, you're lucky to even get a pullback.

 

[frank8800]

Quote from NoDoji:

I have to agree. When I put on the trade, I've accepted the cost of admission ...

Interesting you should say that. I've just spent the past 5 hours programming and analyzing an NT strategy (a simple shooting star), playing with candle shapes, stops, targets, entry prices, etc. and found that for a particular candle, the maximum profit ($4,300 from Jan 1st) occurred with an 11 tick stop and 35 tick target, but the win rate was only 29%, and there was a losing streak of 11 trades. For me, this really highlights the psychological aspect of this - How would I feel after losing 11 trades in a row, and having a win rate of less than 1 out of 3? I can answer that easily: I'm one of the aforementioned weak hands.

I know that back testing doesn't represent reality exactly, but even if I were somehow given a guarantee that the strategy would play out exactly as in the past, I'm not sure I could resist moving my stop to BE after 20 or 30 ticks.

 

[Picaso]

Quote from frank8800:

Interesting you should say that. I've just spent the past 5 hours programming and analyzing an NT strategy (a simple shooting star), playing with candle shapes, stops, targets, entry prices, etc. and found that for a particular candle, the maximum profit ($4,300 from Jan 1st) occurred with an 11 tick stop and 35 tick target, but the win rate was only 29%, and there was a losing streak of 11 trades. For me, this really highlights the psychological aspect of this - How would I feel after losing 11 trades in a row, and having a win rate of less than 1 out of 3? I can answer that easily: I'm one of the aforementioned weak hands.

I know that back testing doesn't represent reality exactly, but even if I were somehow given a guarantee that the strategy would play out exactly as in the past, I'm not sure I could resist moving my stop to BE after 20 or 30 ticks.

You're onto something: you have to find a trading system/style that fits with your personality, otherwise you'll find a way to mess it up.

As for backtesting, keep in mind the maximum drawdown, that with automated systems and real money on the line tends to affect people more than the number of losers in a row.

 

[NoDoji]

Quote from frank8800:

I know that back testing doesn't represent reality exactly, but even if I were somehow given a guarantee that the strategy would play out exactly as in the past, I'm not sure I could resist moving my stop to BE after 20 or 30 ticks.

I always move my stop to b/e after 20 ticks. There's no way I could let a 20-tick winner turn into a loser. After 30 ticks I usually begin to trail a stop and may move the stop to lock in 20 ticks minimum profit in certain circumstances. There's often a discretionary point where I'll just take it off.

If the trade moves 20 ticks in your favor and reverses all the way back to stop you out at break even, there's a particular statement you can make (loudly and accompanied by the flinging of an expendable object is most effective), that can help place you back in the proper state of mind to trade the next opportunity that arises:

"CL can kiss my white ass!!!"

("brown ass" or "black ass" may be substituted when applicable)

 

[DoubleTop]

How does this sound for a rule? Assuming that we are price action traders;

"If a trade is a counter trend trade for the day moving stop to +1 entry price or BE is a good idea. Otherwise, don't move your stop until you are locking in substantial profits?"

I like this idea because I trade counter trend all the time when price hits and leaves my supply/demand zones. So I have no trouble taking those countertrend trades, however I hate when I see a countertrend target and for whatever reason price turns on me before hitting my target. I doesn't happen a lot now days, but it does happen from time to time. I guess you could say I just have a greater respect for countertrend trades. I'm still new to this but price action has changed my life! What do you think?