Feeling a Little Down

[HobbyTrading]

No, I read stuff on "Price Action" (all the flags, patterns, triangles, etc.). I read up on candlesticks. I read a ton on how institutional traders trade - hundreds of forum posts (I concluded that they didn't do anything different than the rest of us). I read up on how to use market profile. I read both Livermore's & Lefevre's books (both were saying to take longer-term trades so I started doing that). Mark Douglas' Trading in the Zone. I also experimented with various indicators and basically tossed them all out (my chart only uses a volatility indicator and volume). I used Emmett Moore's blog to figure out which "courses" were fraudulent and what they taught (and summarily threw all that out of my mind and treated as "wrong"). Recently, I've been reading on price behaviour. So this thread: https://www.elitetrader.com/et/threads/tutorials-on-reading-pure-price-volume.315973/#post-4567199 . I also read this: http://www.streamhedge.com/ . And I read http://www.jltrader.com/strategy/ and tons of stuff from Vlad's blog. I watched a bunch of YouTube videos on trading, psychology, etc.

I have the impression that you did not read up on money management, risk profiling and position sizing. Which is, in my opinion, at least as important as the things that you did read about.

 

[SoesWasBetter]

LOL.. I did have second thoughts after posting because it really is just a waste of time on my part.

But seriously, can this really be true? I mean if this one trade is a loss of 15k, and sure, he says he averaged into it twice. But even if we assume a typical trade would net him 5k, how does this compare to the fact that he said he made about 4k a month? How is this one trade so much bigger, worth an entire month, even before it was averaged into? And even if this one trade is just massively different than all the others, still, at the numbers he is throwing around, you would assume he is at the level where he is keeping charts. You don't get to the level of supposedly making 4k a month without keeping charts that you go over.

He says he is keeping notes, but then he says he doesn't know how he draws his lines? What kinds of notes is he keeping? If he was to say he randomly clicks and it works out, I would almost believe that more than to say he is actually keeping notes, but miraculously, no charts.

We have too many of these brand new posters with these outrageous stories and then everyone wastes their time, and then the poster is gone.

Of course. They are so helped by the wizards of ET, that they soon make enough to stop trading and live out their miserable lives drinking Dos Eqqius on the beach

 

[Xela]

If you dropped 15K, then I would hope your account is well into 6 figures.

To have $15k at risk on a single trade, I'd want an account that's well into 7 figures, myself ... ("just saying") ...

Something's radically wrong with the position-sizing, when someone trading regularly talks in the same post about making $3,500/$4,000 per month and about having $15k at risk on an individual trade.

It makes me suspect that Gotcha may be correct, because people who can make $3,500/$4,000 per month for a year have to know better than that.

 

[Humpy]

Sprouts ( maybe from Brussels ?) made a very valid point that took me a long time to take action on.
The point is one feels in a desperate hurry as situations come and go.
1. Curb that feeling and don't rush it.
2. Importantly never change more than ONE thing at a time and then test it. A lot slower but a lot surer and you know exactly what the change does. Write the result somewhere so it's not forgotten. Use 1M to speed it up real time.

 

[qxr1011]

The thing is, last year, I was bringing in $3,500 - $4,000 a month until I made a wrong move in one trade. It was a losing trade in Nike and I averaged down twice. I think that's when I started reading everything I could get my hands on. Prior to that, I was actually doing what SteveM was describing above. Except instead of 1 day, it was 1-3 days. The thing is, I don't remember how I decided when to enter and exit. But whatever I did, it worked! And I had to go ruin it all.

I see.

Many years ago I wrote an article called "The power of the dilettante" on some Russian forum (if u know Russian i can give you a link).

My argument was and still is that some dilettantes have the prolonged beginners luck, but behind this luck is an instinctive (do not confuse it with intuitive) trading.

Instinctive trader may know nothing of the trading theory, but he has an innate sense of where the market goes, how to run with the crowd, and not against it. This kind of trader can take huge risk (often without realizing it), and stick successfully to the positions which would long before be abandoned by any seasoned trader.

But here is the problem: the day comes and the accumulated experience and wisdom of the instinctive trader overtake his instincts, fear enters the equation, especially after some big losses. He suddenly realizes that he knows nothing, that he walks on the tightrope, that he needs knowledge, education and experience. He starts reading books, taking courses, attends forums, blogs, etc etc.. and really becomes more knowledgeable than he was before.

The problem is with the reorientation on knowledge and experience he lost his instincts (that's why you can not remember what and how you did last year)...forever...

Another problem is that the knowledge he attained is theoretical.

He never actually had a working method before (even though he thinks he had). Now he has the method, but his method is a hodge-podge of ideas mixed with some feelings. One can not trade ideas and feelings successfully, regardless of how good they are.

And as the result instead of running with the crowd he now runs against it, while doing almost everything what books and courses dictate.

Now he faces a monumental task - becoming a truly methodical trader.

 

[Overnight]

This is really frustrating. Just got out of a painful trade. I thought I was starting to make sense of this and then, bam, there goes $15,000 right before Christmas. I haven't made a penny this year and I've been much more disciplined. Really wish I didn't have to keep paying market tuition. How does one handle this kind of disappointment?

If it makes you feel any better, I also made a $15K blunder in one day 2 summers ago in a similar fashion. I went long in TF, live, right when China devalued the yuan (on the same bloody day and didn't hear the news yet and didn't know how that might affect the markets), and I averaged down (pyramid down as you say). That averaging technique had been working for me very well in sim for the previous year up until that point, but the ol' black swan bit me with hissy, sharp pointy teeth when I went live. VERY BAD TIMING and VERY DUMB OVERSIZING!!

I too was numb to the loss, and the next couple of days made about 2 grand back, floating along and trading while shell-shocked. But the next week I took a serious pause and contemplated that bad day, and to deal with it I went back to sim and spent over a year restructuring how I trade, exploring other markets, and finding what fit for me.

I went live again this year, the progress of which you can see in my journal I have in that section. Rebuilding confidence...slowly building up my tolerance for taking losses...These are the things I needed to work on, and still do, but it is getting easier.

You're never going to forget the big one. Nobody ever does, and that is a good thing I suppose. It help keep you in check, or should. But If you can build back up your discipline and risk management, you can recover and become better and better at it to the point where your confidence will carry you through bad times. It may not take you over a year of sitting on the sim sidelines like it did me, for some folks bounce back faster. Some slower.

It is not an easy road, but it can be done. At least take comfort in knowing you are not alone.

 

[formikatrading]

I'm not sure exactly how you trade but anytime indicators are involved, it's important to realize that indicators need to be interpreted in context. That is why there is no perfect indicator and all these folks will reference studies that show that indicators don't work (see link below). This concept took me a long time to figure out -- context requires fully understanding the market environment, the risks given the environment and viewing the market in multiple time frames.

 

[JSOP]

Ok, the questions have spurred me to once again try to piece together what I did prior to my reading spree.

I know for a fact:
- I used MACD with the histogram. When it was green, I held onto the trade. When the bars looked like there were not getting "longer" and the two lines appeared to converge, I got out and started looking for opportunities to take the opposite trade.
- I used Marker Indicator from ThinkorSwim as a momentum indicator alongside with MACD.
- I would always have a directional bias on the stock I was trading. It didn't matter if it was down or up. If after reading up on the company, financials, etc. I would decide "this one looks like it is profitable for the next 6-12 months". I would keep this directional bias in the back of my mind and have a tendency to take more trades in that direction. It didn't matter even if the general trend of the stock was moving in the opposite direction of my directional bias.
- I would never trade anything less than 2M in volume. This hasn't changed.
- I had no other indicators other than volume and volatility indicator. I did not use SMA lines, Bollingers, etc.

What I don't know for fact:
- I can't remember if I drew S/R lines. I don't think I did because S/R lines are part of all those price action courses/free articles. And I didn't start reading those until much later.
- I didn't care about the candlesticks and what they meant. All I looked at was the big bull candles or the big bear candles. When I saw it, I *think* I interpreted it as validation for my current trade or something - I can't remember this part.

The trading itself:
This part is difficult. If we use VLO as the example, I would have taken a short near the top of today. Then waited for a day or two. If the next day showed a continued move upwards, I *think* I would've gotten out and waited for the next "high". Then I would use the MACD and the Marker Indicator alongside with volatility indicator and decide when to exit my trade profitably. I would then somehow, magically decide to take the opposite trade at the "bottom" of the down move. How I defined "bottom" is lost on me today. If I were to apply what I know today, I *think* what I was doing was going long when price moved back to the original breakout point (from consolidation). And then I would go short when price appeared to reach beyond fair value. If it broke out of that top, I would go long on what would be the "new" breakout point. This way, I only held for a day or two. Repeat and rinse. But this is hindsight... which is always 20/20.

See, none of the above makes any technical sense. "Directional bias", all those indicators, no S/R lines drawn, no pivots marked... yet, I was making money. Pure luck? I know for sure I'm not making money now!

If you are using MACD from IB, something you need to know that I discovered about MACD histogram from IB, it repaints. I have checked it again and again and again, its difference between the MACD and the Signal line changes from its initial value the next day.

Anyway since you stated that you don't use technical analysis that much, looks like what's killing you is just your risk management. You need to implement an effective stop-loss in place to get out of a losing trade and have the discipline to do so when the price is not going your way especially with your breakout strategy. There are a LOT of false breakouts and bull traps so it's important that as soon as you see the breakout is not happening, you need to get out and then get back into the market when you see a good opening.

With your strategy overall though, you have to be prepared for a LOT of losses even with stop-loss simply because there are more false than true breakouts out there so your chance of being profitable on a breakout is lower.

 

[tomorton]

If you are using MACD from IB, something you need to know that I discovered about MACD histogram from IB, it repaints. I have checked it again and again and again, its difference between the MACD and the Signal line changes from its initial value the next day.

Anyway since you stated that you don't use technical analysis that much, looks like what's killing you is just your risk management. You need to implement an effective stop-loss in place to get out of a losing trade and have the discipline to do so when the price is not going your way especially with your breakout strategy. There are a LOT of false breakouts and bull traps so it's important that as soon as you see the breakout is not happening, you need to get out and then get back into the market when you see a good opening.

With your strategy overall though, you have to be prepared for a LOT of losses even with stop-loss simply because there are more false than true breakouts out there so your chance of being profitable on a breakout is lower.

If you are using MACD from IB, something you need to know that I discovered about MACD histogram from IB, it repaints. I have checked it again and again and again, its difference between the MACD and the Signal line changes from its initial value the next day.

Anyway since you stated that you don't use technical analysis that much, looks like what's killing you is just your risk management. You need to implement an effective stop-loss in place to get out of a losing trade and have the discipline to do so when the price is not going your way especially with your breakout strategy. There are a LOT of false breakouts and bull traps so it's important that as soon as you see the breakout is not happening, you need to get out and then get back into the market when you see a good opening.

With your strategy overall though, you have to be prepared for a LOT of losses even with stop-loss simply because there are more false than true breakouts out there so your chance of being profitable on a breakout is lower.

Hi JSOP - you arte right about indicators re-drawing. e.g. my Sharescope programme prints (EOD, not real-time) forex charts at 1730 UK time (based on 1630, London market close), then 2200 (based on NY close), then appr. 0600/0700 (I assume this is based on midnight price data).

Obviously charts and indicators will be in one of the three daily editions depending on when you take a view.

 

[rvince99]

Never, ever, EVER put yourself through the wouldda/shouldda/couldda's in this game. That negative stuff will, at best, just eat you up.

You really MUST learn from your mistakes and not fall prey to them again. You get up, you get it back on the rails.

Always remember that your best trades are ahead of you.