Maintaining Self Discipline

[studentofthemarkets]

This was one of those days where I don't really want to talk about it.

Lost quite a bit today. I didn't like taking longs when we are making new highs. It didn't make any sense to me. Who would buy stocks at all time highs? So, that hurt a lot. I waited for a sell signal. Then I decided my system wasn't giving me sell signals, so I would sell when I thought it should go down. That didn't work. After it kept making higher highs, I finally gave in and traded some longs using my system.

I used 2 contracts today with the idea that I would try to trade one as I would a single contract...approximately out around 20 ticks and use the other as a runner. That should have worked if was calling the trades right. But since I wasn't, I am very much in the hole today. It was also very different trading with 2 contracts and trying to manage them and I botched that too at first, until I settled for about 20 ticks for both contracts. I had 7 nice winning trades that were exactly how I'd like to take all my trades....perfect entries and exits and all 7 were completely abiding by the rules of my system. OK. Tomorrow and from now on....no more trades unless they follow the rules of my system.

I'm too embarrassed to post my trades from today. I didn't trade well (deliberately) and now stuck with a bad losing day that I wish I could erase, that is, unless I can learn from today and start trading better.

 

[studentofthemarkets]

This post will only have positive things to say.

Today was a great day for learning from my mistakes.

Today was a great day for showing me that I need to be very precise with my entries and have a very set system for how I take profits. I had one trade that went to 174 ticks ($870) that I closed for 40 ticks ($200). I learned through many errors how difficult it is to trade a bottom edge. The bounce from it does come, but doesn't undo attempts with unmanaged losses (although I did stick with 10 ticks for a stoploss....I really like that setting). I attempted a strategy I had heard of: to close one contract in profit quickly to allow the 2nd contract some room around a bottom edge. I learned that I should either practice this in replay mode until I learn how to do it right or just stay away from those trades, especially during regular trading hours. I re-learned for the millionth time that my system for identifying good areas to enter a trade works and I really should take those trades (only). I learned that I have a problem with waiting to be selective for a trade.

I am very glad that I did not trade with real money today. I'm very thankful for every trader who has warned me that I'm not ready to trade live. Heeding those warnings has saved me a lot of money.

I'm very thankful to be able to practice trading. I love the challenge of it and the thought that there may come a day when I will trade very carefully and accurately and actually make money with this.

Practice Demo Account trading the first 6 minutes of the open: 102 ticks profit

Main Demo Account: Losses were too big to post on here. It's way too embarrassing. And it wouldn't really be fair to post them because I was trying to learn to trade with 2 contracts and learn to enter trades that I knew were difficult and low probability. Honestly, even though the trades weren't always well taken, I do think it was a good experience to go through. And I do think the more I fail and keep trying, the better I'll get at recognizing when to stay out, when to enter, and when to close. I'd have rather spent the 5 hours this morning trading intensely and failing, yet really experiencing that when a market is dropping, it just may continue to drop, and reversals usually retest and run your stop and so on, then to have stopped when ahead with the Practice Demo Account's profits.

 

[studentofthemarkets]

Practice Demo Account for the Open: $285
Main Demo Account: $120

Yay! Both accounts ended in profit today!

I pointed out on the charts a problem I'm having that keeps recurring and was responsible for most of my losses today. When I find an area where I believe price will begin to move from, I will enter and if stopped out, and the trade still looks good to me, I will re-enter again. But then this process keeps repeating itself while I rack up losses. Each time I think, "Well, this time the trade should work." This has hurt me terribly in the past and it's something I've tried to work on before, and yet haven't found a way to avoid it. Placing a box around a losing trade every time I have a loser might be something that will put a warning check in my mind if I try to trade in the box again. I'll need to do some backtesting to see if waiting until the breakout of the box works for catching a trade, but it should at least help me to be more alerted to a danger trading area.

Today I really struggled with myself to carefully follow my system. The losing longs in the Main Demo Account, the first trades taken, were only partially in agreement with my system and probably shouldn't have been taken or needed to be taken a little earlier. The rest of the trades aligned with my rules. I didn't trade against the system based on how I thought price would move, and that is what I'm striving for.

 

[studentofthemarkets]

With today's high volatility, I decided not to trade in the Main Demo Account and just traded all day in the Practice Demo Account for the Open. I used it to see how well a 10 tick stop loss would do on a day like today and to practice managing the stop losses and targets. I had quite a few really good winning trades that didn't need a larger stop loss. For the last hour of trading I used 8 ticks stop loss with 10 ticks 1st target and 40 ticks adjustable 2nd target and I ended slightly positive using that. The losing trades weren't due to needing a larger stop loss, they were due to not waiting to place a trade carefully, same problem as earlier in the day.

The Practice Demo Account ended in losses today and it seems to be due to 2 things: 1. Not waiting to enter a high probability set up and 2. When I get stopped out I re-enter in the same area and have multiple stopouts in a row. I worked on reducing multiple stopouts today, and found that drawing a box did help and focusing on 1 min candles also helped way more than I thought it could.

Something else to remember: my trades are usually right when price is trending strongly. When price is reversing or choppy I do terribly. I need to be more aware of this when timing my entries.

 

[studentofthemarkets]

I thought I'd post my best section from today so that I'd realize that I really can trade and make money, I just need to work on getting trades that look like these. This section, from 9:17 to 10:10 CT, was definitely "cherry picked" to post on here because the account ended in a large drawdown. However, the profit just during this time came to $1,580 after fees. I need to learn to trade as I did during this section.

 

[studentofthemarkets]

Practice Demo Account trading the Open: $240
Main Demo Account: No trading today

Took a quick 48 tick trade at the open. I have something else going on today, so can't trade for the rest of the day. It's nice to make a profit with the first trade taken and be done.

 

[studentofthemarkets]

I didn't trade at all today.

Someone I know blew his trading account today. This brought back memories of blowing my account multiple times. Funny how that would work. I'd read or watch about a method, think I understood how it worked, then "practiced" with real money, trusting that if it worked for the instructor, I could do this too. This last year I've finally worked with a good system and still have had problems with being profitable while staying in demo (mostly). Knowing the right way to trade is the first step. Next comes learning to trade the same way with real money. What I've been doing with having a few days here or there end positively by a few hundred dollars but on the down days ending with thousands of dollars in the negative is not going to work with real money. I do think it served a purpose for helping me to learn to trade my system better. However, the trades that I took that I posted on Monday show that I do know the technique of making an accurate trade. I have learned to read my system enough to take a good trade. What I need to work on now is taking those trades with minimizing the losses. I thought about drawing a box or using 1 min candles and a few other methods for limiting multiple losses, and those are all helpful, but it doesn't produce the sting of the loss of real money and so aren't enough of a help to use alone for learning to take only winning trades. I have decided to go back to limiting the number of losses I can take in a day. I've decided on $440, the amount of 4 two contract losses. It's much higher than I would want for real trading, but I do still need the practice, and don't want to have to stop for the day too early. And it will give me a target to work toward. If I know my losses for the day will only go to $440, I can then shoot for making at least $440 because ideally I shouldn't be losing more in a day than I usually make in a day. I'm not making $440 a day yet, but some of that is because I'm taking losses I shouldn't be. So this plan is to work on that.

Sierra Chart has a loss management feature where it should close out any open trades and now allow any new trades after the limit is hit, which I set for $440. I set it up today, for the first time ever, so I don't know how well it will work or how it will work when using 2 demo accounts. But starting tomorrow, I plan to use it.

It's not the cure-all answer for overcoming revenge trading, because I think I can just go in and reset the settings after getting locked out to begin trading again, which defeats the purpose. But it would be helpful to have a break in uncontrolled losses. It would force me to make a deliberate decision to break my rules and reset the loss management. Since trading is pretty much just about how well you can follow rules, it's probably going to be a good indicator of whether or not I have the ability to follow my plan and do well as a trader or give in to my emotions and trade without rules, which is much more likely to end in disaster.

 

[studentofthemarkets]

I didn't trade in the Main Demo Account today. Tried to a couple time, but the price movement is jerky and probably need more than a 10 tick stop loss, and I didn't want to mess with that.

I stayed in the practice account all day and worked on a few things. For a while I changed my chart to just using one indicator and I think it helped develop a better feel for how price behaves around it. I also tried using 40 ticks for the 2nd contract vs 20 ticks vs adjusting it. I think my preference is to adjust is according to how price is moving, but it's very easy to lose gains when it starts retracing quickly. I have a few methods of exiting that I'm trying out. As long as I use them, they do help keep the gains. When I do nothing....I'm always surprised at how quickly something that was trending really well can turn around and still give a negative 10 ticks.

The loss management system didn't work, but it could be because I was on the 2nd demo account. It's attached to the main one, so I thought the setting would work for it, but it didn't.

Well, I thought I'd go ahead just now and and take some losses in the Main Demo Account to try to get the loss management system to work. It didn't. I was down by -$120 and I had reset it shut down at -$50 and it still let me take another trade. Well, the next trade made $, so now I'm up $265 and so, surprise, I actually made some demo $ today after all. Guess I'll post my trades and be done for the day. I like ending in profit, at least in one account.

 

[studentofthemarkets]

Seems like I got the loss management system working for the Practice Demo Account. I set that one at -$450 and changed something on the loss system for the Main Demo Account, and that one is set for -$450. Well, that's 4 two contract trades allowed for losses in each account. I need to allow for enough losses that I don't have to quit for the day too soon, but this would be way too much money if in a real account. Ideally I need to be making for than $450 daily in each account, if I have that much loss allowed, so that's my goal starting tomorrow.

 

[studentofthemarkets]

Today I've come the closest to quitting trading that I think I've ever come. I was so determined to trade well and follow my loss management plan and I really tried.

The loss management system worked for the Main Demo Account. It shut down trading after $495 in losses. I have the trades posted below.

The loss management system didn't work for the Practice Demo Account. I decided to just keep trading after 4 losses were taken and so, I got a lot more practice in. Since today was crazy, I used it to try to work on things. I tried using a trailing to BE stop loss. That didn't work, which is also crazy because most of my good trades don't need much of a stop loss. I tried using a 6 tick stop loss and then a 15 tick stop loss and sometimes those helped, sometimes they didn't. I racked up losses to $9,830 at it's highest drawdown, thankfully, only demo. The losses, even though I knew it was a crazy day and I wouldn't have tried trading with real money, really made me wonder if I should just quit. There comes a time when you consistently take so many losses, and it has nothing to do with wanting to do well, that you really don't want to ever risk real money doing something that isn't working. I haven't given up yet, but I definitely need to be trading more reliably before using real money or even considering this to be something I could ever rely on.

There was something interesting about trading today. The last part of the day, beginning at 10:14 CT I made back $2,455 and had a win rate of 62%. There are only a few differences I can see between this successful part of today and how I traded earlier. First, it seemed like using 20 ticks sl and 20 ticks 1st target and 40 ticks 2nd target would be workable, after trying so many variations earlier in the day. Second, and most important, the trend up did not have much whiplash and so even my late and not so very great entries still usually managed to make a profit. Is this a key to trading? I already know I do better in a trend. Do I need to be able to recognize a trend that isn't going to have much whiplash on the way up in order to be profitable? The trend starting from 10:14 CT was unlike anything I've noticed happening much on the NQ. But there are plenty of good trends on the NQ. Can I can learn to recognize a trend starting? Most of my trades I "believe" are a trend starting, but they rarely are. However, I do think this is the key to being successful. It kind of goes back to the plan I had for this journal, to learn to find a low risk method to enter a trend. I don't really want to trade multiple times a day because every entry carries such a high risk to being stopped out. It would be better to find a good entry and trail the profits. I really need this as a plan instead of allowing multiple entries because I have the bad habit of re-entering too many times quickly when stopped out and that can blow an account in no time at all. So, maybe I need to go back to what I used to do.... try to find a trade at the beginning of a trend and learn to trail it in a way that will give the best profit. I'll still give myself 4 tries a day in both accounts, but it would be better to not have to use them and get one good trade in. Not sure how well I can do this, but it's my goal. It used to be my goal, and I don't know how I got so sidetracked and began taking so many trades in a day...well, I was practicing and trying to learn price movement and then I kind of forgot the original plan. Ugh...that was the plan that I'm suppose to be using on the Main Demo Account, and I got far away from it. I get 4 tries a day to catch a trend starting Monday. The Practice Demo Account for the Open will be traded a little differently because it's just for the open, and I don't know how to trade that very well yet.

Sure hope next week ends better.