EUR/JPY Evening Trader

Status
Not open for further replies.
Gringinho,

Your views on trading are very interesting. I will respond to them as I'm reading them.

Bias -- I believe you are very correct in your analysis, but I believe bias is inevitably something that must be conceded by traders. It is impossible to know and have a deep understanding of all the market's factors, and it would perhaps drive the trader insane. Since all these factors are intertwined, I believe it is important to choose a bias -- mine is price action/technical analysis.

"In sync" with the markets -- my trading is not entirely technical analysis. I spend my time watching and trading the market with the intent of both getting this "feel" for the market as well as practicing what I know about TA and my strategies. For example, I don't just blindly buy at the pivot, or whatever level. I need appropriate PA that I believe is strong or turning in my favor -- this is something I need to develop more, but I am getting much better at identifying strong moves just in PA.

Scalping -- this is something similar to what I was trying early in my trading. However, I was ending up with 10-12 trades in an hour, about 20-36 pips in commission per hour of trading. In normal Asian EUR/USD conditions, there is a lot of nothing. It is practically impossible to make a profit like that, hence my newer TA based style. Similar to your development, i have moved inward in time -- began with market basics, learned about investing and strategy, position trading, swing traded options for a bit and now my timeframe is generally 10-60 minutes on the EUR/USD.

Stubbornness - this is a mental drawback for me, but I believe I can make it a trading asset. Although I have firm beliefs, I remain open to new ideas. As far as I am concerned, every time I am wrong and correct myself I surpass thousands of others who don't. I love being wrong just as much as I like being right in this game. Once I am "in sync" and profitable, I believe my stubbornness will in turn prevent me from being flimsy. For example, if one of my deep trading understandings is proven wrong a single time, I will not let my market analysis go to shambles and will instead hold onto the analysis that I know will keep me profitable. It will require a bit of molding, but I have the discipline.
 
The 10% drawdown

This was a turning point for me. I believe I was
A. trading with some emotion
B. not following my trading rules
C. taking too many trades
D. trading on another account (after losses my original account was only 700 with one pip being $1 based on the minimum lot of 10,000 EUR. I lost 70 pips, or 10%). My newer one, since that time is about 1950-2000 again with 1$/pip
E. I didn't know what was going on with the market, and I was trying to have more flexible stops to give the price room.

As for not following my trading rules, I think these edits in them will show my frustration

4. Follow the trading rules that you read. Do not make decisions in real-time that may be better than the trading rules. Follow the trading rules. Do not act on a rule that you think you may later add to the trading rules. Write it down – DO NOT act on it. Follow the trading rules.
5. Remember that the rules are here for a reason. If you break the rules, stop trading for the day.

I was having problems with the rules just as much as I was having problems keeping up with a journal... ;-)
 
Quote from cabletrader:

It might help to be pointing in the right direction though!

I love you academic types with all your 200-word theses and in-depth theory and analysis of the markets and yourselves, it's a typical example of not seeing the wood for the trees.

How can you seriously say "I feel like I pretty much know everything I need to in order to trade well and profitably" when you seem to be overlooking the most obvious? How can you trade well and profitably when you have larger and more frequent losses than you have gains?

Maybe concentrate less on market analysis (after all, price can only go one of two ways) and spend more time on risk and money management, which don't seem to feature anywhere in your journal as far as I can see.

You did say people should feel free to post 'whatever is on your mind'........:)
More...

The 200 word analysis is an attempt to get some of the patterns down that are profitable in the Asian session. In normal conditions there were very few tradable moves (about 20+ pips is what I'm looking for for a good R:R right now).

The fact that I said I know and understand all the concepts I need in order to be profitable is a bit misunderstood. Let me explain:

I believe I know all the concepts I need to trade profitably (management, PA, TA, various tools, etc.), but that does not mean I am applying the concepts and actually trading profitably.

Knowing concepts and applying them are two immensely different things. Ever tried to teach someone math who you know can eventually do the arithmetic but will never be able to understand and apply it? That's kind of where I am right now, although I have the potential (I believe, the market is unlike any math problem I have ever seen).

As for money management, there's little point in developing a money management plan when I am losing and therefore will remain trading paper. My first goal is to have money to manage, naturally. I have a few guidelines and ideas I would like to implement, but see no current need to develop a plan.
 
Right now, just trying to turn the negatives into week after week positives.

Btw, I do understand your critiques of my studying the market moves, but due to my repeated failures week after week, I believe I need to grasp a firmer understanding of the moves I'm trying to catch. I will keep it at least temporarily, as I have seen good improvements in my analysis as a result.

One last thing I forgot, Gringinho, I do realize the limitations of objective historical studies -- I do spend about 2/3 of my time watching and trading, with the rest split between maintenance tasks and the studies.

I appreciate the criticism, and yes continue to feel free to post whatever is on your mind, as long as it is relative. ;-)
 
Money management should be at or near the top of your list.
I would say it is the most important part. Even more so if you are posting losses, real or otherwise. Having a clear money plan will allow you to stay in the game much longer. I don't know how many different ways to say it.:(
 
Quote from davidmaria1:

Money management should be at or near the top of your list.
I would say it is the most important part. Even more so if you are posting losses, real or otherwise. Having a clear money plan will allow you to stay in the game much longer. I don't know how many different ways to say it.:(
More...

Perhaps you all are right. Since I've been trading paper, I figured money management didn't really matter that much (my plan was to spend the last three or so weeks of paper trading formulating and practicing my plan).

Currently, I only have a few definitions of how much I am willing to trade compared to my account. My other plans included a withdrawal of profit policy, trading finances policy (I plan to stow away at least a full year's of living expenses at all times when it becomes my full job), and a few other things. I do not currently have a drawdown policy.

I will make one, as well as a "trading ladder" this sunday during my maintenance session and post it. Thanks for the advice
 
Quote from TraderGreg:


The 200 word analysis is an attempt to get some of the patterns down that are profitable in the Asian session. In normal conditions there were very few tradable moves (about 20+ pips is what I'm looking for for a good R:R right now).

The fact that I said I know and understand all the concepts I need in order to be profitable is a bit misunderstood. Let me explain:

I believe I know all the concepts I need to trade profitably (management, PA, TA, various tools, etc.), but that does not mean I am applying the concepts and actually trading profitably.

Knowing concepts and applying them are two immensely different things. Ever tried to teach someone math who you know can eventually do the arithmetic but will never be able to understand and apply it? That's kind of where I am right now, although I have the potential (I believe, the market is unlike any math problem I have ever seen).

As for money management, there's little point in developing a money management plan when I am losing and therefore will remain trading paper. My first goal is to have money to manage, naturally. I have a few guidelines and ideas I would like to implement, but see no current need to develop a plan.
More...

It seems like you've reached some very logical conclusions and have itemized what you believe you need to learn, a syllabus if you will. They're unarguably logical but are they really the essence of trading, I don't think so.

"....there's little point in developing a money management plan when I am losing...". I guess that's a classic chicken and egg dilemma and I have my own theory about why such a high percentage of potentially profitable traders lose money, it has very little to do with market analysis or direction in my opinion.

Mark Douglas in his book 'Trading in the Zone' gets the message across (albeit repetitiously!) much better than I could hope to convey it, if you've not read the book can I make a suggestion that you add it to your 'to read' list? You are more than welcome to my .pdf copy, just drop me a PM if you want it. It's hard to pinpoint but after several months of unsuccessfully searching for that elusive indicator or system I think reading his book put 'trading' into perspective for me and gave me my own personal 'ah-ha' moment, if nothing else it's an interesting read!
 
Today was supposed to be a study day, but I accomplished far less that I even did last week when it comes to actual writings in one of my journals. I analyzed maybe a quarter of a single move.

From there, I moved on to watching for the day, getting sidetracked with fibs, pivots, organizing some of my charts on TOS, and some more experimenting.

Overall not a bad day, I did fairly well with market direction, although it was an extremely volatile Asian day again.

I have also decided to scrap fibs for the most part. It's too easy to just sit and draw them forever as part of market analysis, produces tons of levels to watch, and is king of the false signal.

I think I'm better off just using PA and pivots for a while, at least until I get them down better.

Total work was 3.5 hours today. Will be back tomorrow for normal watching session.
 
Today was a fantastic observing day, I thought. I nearly always had a great idea of market direction (I believe I got jumbled only two times, once after the very first correction after the top (the second correction got me a bit confused), and another time that was only very minor.

With that in mind, I believe my market analysis and ideas are advancing rapidly; I even find myself rooting for corrections and consolidations as I know that the largest moves take considerable time to develop.

My only real concern is that I am identifying the smaller moves of 10-15 pips very well. As with early in my trading, I am very afraid this will encourage too much trading. And, since commissions may be 2.5 pips, an entry may take 2 pips, and an exit may take 2.5 pips, then I need to be right maybe 90% of the time with a four pip stop (I believe I did that math right) for catching a 10 pip move. Clearly unlikely. Although I’m not looking for 10 pip moves, this kind of trading is a result of protecting profits and trying to put myself in better position for the next swing. I will have to be very disciplined to overcome these temptations.

Total time for today was 3.75 hours, with 30 mins of re-organizing my charts (accidentally deleted one, forgot to save pivots and had to do a few other things as a result), and 3.15 hours watching (7:15-10:30). Will be back to trade tomorrow, up to 7.25 hours for the week.
 
Cutting my day short again. Kind of day that started out very benign (as did PA) but then just got increasingly painful. I’m going to revisit what happened:

Before the beginning of the consolidation that ended up turning into whopping pips, I only made one trade that resulted in just a miniscule loss. I was bearish on the market. I believed that there was a good chance that the market could make a bullish run up to the monthly pivot, but the relaxed PA made me think that the energy just wasn’t there, and the weak choppy trend had me looking for a short back to the bottom of the channel.

Then, a mid-channel fairly major trendline broke with vertical strength. With the belief that the move would have needed a consolidation, I waited for it. It came, pulled back in a nice 1-2-3, and then continued for a few pips when I entered short. I let it move around a bit, then hit my stop for an 8 pip loss. I saw the upward drift as a possible long entry, but believed it was a pullback process and/or bear flag.

I waited. Believed there was plenty of room for the uptrend to run, and realized I actually missed a signal on the 15 min that I minimized in my windows, but I did not reverse – I did not want to be just entering and reversing constantly, knew I messed up a bit on missing my signal, and was still a bit bearish. Then made a small gain on the correction.

Then the mammoth move came. It started out very strong, but I was still looking for a 1-2-3 or double top. When it didn’t come, I knew I made a mistake. Even though I immediately realized an entry would have a very good R:R, I stayed out with my same cautious discipline in mind – I was not here to let my market view go back and forth, and I believe it was a good step for my emotional progress.

When the mammoth move topped, I entered short. I was only 6 pips down at the time, not bad for being wrong/missing nearly every move. Anyway, things got bad – I forgot to update my channel upper bound (I had it from last correction of downtrend to uptrend high, but didn’t update it when the second channel high passed through it), and thought the mammoth move had hit the ceiling. I was still working with a 30 or so pip gain after the first correction, but my target was the 38.2% retracement. In hindsight I should have been scalping on the 10 second since the swings were so wild. I exited once my 30 pip gain evaporated to 3, as I was trying to hold for a longer time goal.
Within about 15 seconds of my exit, it then made a little reversal and began again short.

I got angry at myself for being emotional, but knew my direction was short so I entered again. I also noticed the higher low, and thought it was going to be a consolidation then downtrend so decided not to scalp (bullish divergence, IDIOT) Hit my stop – loss of 12.5 pips. I then decided to only look at the 5 min, as my direction was still short. Not a good idea. I had my stop a few pips above the high, and decided only to look at the chart and not my P/L. Another bad idea. I forgot about the stretched scale I was working with, and as the high was not the correct channel line, I thought I was making a good decision. It rallied right up and through it, a loss of 37.6 pips on one trade – and it only took about five minutes.

Totals: 8 trades in 2.25 hours or so, including -2.5, +6.5, -8.2, +1, -6, +2.9, -12.5, -37.6. Result: -56.5 pips (-34.5 gross without commissions). Don’t worry, I will be making a money management plan this weekend.

In hindsight, I made several very good decisions in response to my emotional problems early (not just going back and forth between bullish/bearish), but this also prevented me from seeing what was right in front of me. Even so, I still limited losses well while I remained incorrect, and believed my cautiousness showed good trading composure (until began losing it at the end).
As for weaknesses, I don’t really think I need to go over them again, but I need to quit the stupid mental mistakes, tighten up my trendlines a bit, and strip my opinion on market direction and instead just look at the market (trend-following strategies have better R:R anyway…).

Despite my losses, I still believe I am over the hump with market analysis and trading emotion, I just need substantial time to bring it all together (if only I had real time to trade…). Perhaps I will condense my studying and watching into one session, and have two trading sessions like I said I would. Anyway, I will have my money management plan up within the next several days, and you can bet that I will have my charts in the background all day long. I can do this.
 
Status
Not open for further replies.
Back
Top