Maintaining Self Discipline

[studentofthemarkets]

Update:

I've been spending quite a bit of time on 1 hr charts and 5 minute charts trying to get a feel for how the 6E moves. What's funny is that I used to trade forex and EUR/USD a few years ago and never could get an understanding of how it moved. It all seemed very random. Now that it's been a while and I have a better understanding of market structure, it seems like a very different instrument.

My current plan is to focus on 5 days I've selected as representatives of the general movement of the 6E. 2 days have a low range of movement for the session I'm trading in, because slowness and choppiness are difficult for me to trade. After getting to know the price movement for those 5 days, I plan to add some additional days to work on getting to know and see how they compare with first group studied. I'm hoping to start demo trading by Wednesday, but it seems like I see things better when I'm studying charts and not trading, so waiting longer might be more productive.

Although it's really to early to tell, I'm hoping the 6E is a good match for me because it moves more slowly and I think it will be less likely I'll have a problem with overtrading it compared with how I have relapses in overtrading with the NQ. I'm a little afraid to go back to the NQ because I don't trust myself.

 

[studentofthemarkets]

Update:

Still plugging away at studying the 6E and not trading it yet.

Since many of the 5 minute candles seem to range only a distance of 6 to 8 ticks I'm faced with a decision to settle for trying to grab only a few ticks per trade or to learn to read the chart to know how to stay in for longer and maybe make a whopping 20 ticks. It might not be so bad if I can learn to identify when the small ranges are going on and when the larger moves will happen.

I might try to demo trade it tomorrow.

 

[studentofthemarkets]

Off to a good start!

Took 2 trades using 10 ticks stoploss and 10 ticks profit target. Decided I wouldn't adjust the stoploss or target at all, partly because I wanted to work on getting a clear idea of what my winrate is and partly because I really struggled with the temptation to close both of the trades for either a couple ticks loss or just 2 to 3 ticks profit. Having a rule to not fiddle with the SL or TP placement might seem like I'm not trading right when I clearly should close early or extend the target, but the point is to train myself to sit through the process and work on getting an exact entry.

Both trades made 10 ticks.

And I'm done for the day a little early. Don't want to risk having a losing trade and also, it seems I get more accomplished by studying charts, so that's what I'll do for the rest of the day.

 

[studentofthemarkets]

I'm back to my old habit of trading too carefully when I'm in profit....which makes me really concerned about what I'll do when I'm not in profit. I still need to think of a firm plan to follow when I'm losing. I don't think I can really make a good plan until I know what my usual winrate for 10 sl and 10 tp is. If I can get a 75% win rate....then I think I could safely set a rule for stopping for the day after 1 losing trade. If it's around a 66% win rate, then I might allow for more losing trades....maybe 2. With a 66% win rate, if it's consistent, then I should have about 1 losing trade for every 2 winning trades. Once I have a 2nd losing trade it would show I'm not having my usual consistency. If I make a decision to always stop after having a 2nd losing trade, then it stops the drawdown for 1 day to become larger than I would likely make in a good day, and would allow for losses to be made back quickly if the next day is profitable. On the other hand, by stopping after 2 trades, I don't allow for winning trades on that day that should follow a loss, so I could actually be hurting myself by stopping after the 2nd trade. On the other hand, if I don't stop after 2 losing trades, then what if I have a 3rd or even 4th trade....and then I'm back into a losing streak because I didn't stop the streak early enough.

Another option would just be to take the trades that seem correct to take and not worry about whether I'm losing or winning. Just always take a good set up and figure eventually, if I really am profitable, I'll end in profit. I'm too scared of large drawdowns with this way of trading, at least for now.

I need to see how next week plays out before making the plan.

Took two 10 tick trades today, both won.

 

[studentofthemarkets]

I've decided to very carefully trade the micro EUR/USD with a live account. I'm putting the rules on here because it will help me to remember that I do have rules to follow for it.

1. I will only take 1 winning trade per day.
1. If I have a losing trade I will go for 2 trading days without trading in the live account before trying again.
2. The goal is to teach myself in a very slow and deliberate manner, to trade well live. This means I will not take low probability entries to make money, but try to place correctly taken and managed trades.
3. I will not have more than 5 ticks for the stop loss. I am allowed to manage both the stop loss and the profit target, which initially needs to be a minimum of 5 ticks. I think 5 ticks is the equivalent to 10 ticks on the 6E, which is what I'll be basing the trades in the Micro EUR/USD off of.
4. Any trade that loses money, even if it's BE but negative with fees, counts as a losing trade.

I hope I can learn to trail profits and actually make even a tiny bit of $ soon, but I'm trying not to think about it too much, because I don't want to be disappointed. I'm preparing myself emotionally for dealing with a lot of losses, and learning to handle them well. One thing I learned from the last time I traded live, when I didn't limit the number of trades, was that I really can take a lot of losing trades in a row (don't want to say how many). It seems like if you have a losing streak, you should soon have some winners. But it doesn't work like that in trading. Maybe it's because we aren't gambling and just playing a random dice game, but winning comes from taking the right setups. So, if I start having losses in this account then it would imply that there's something psychologically about trading live that is causing me to not take high probability entries and capture the a good portion of the trade's profit potential.

 

[studentofthemarkets]

3 losers and 1 winner today, all 10 ticks each.

I nearly stopped after the first 2 losses, because I'm thinking of making that the maximum allowed in one day. Since I don't have a firm rule here, I took a 3rd loss before stopping....but at least I did stop for the day, even though I really feel the need to practice on the Euro. I'll just study charts for the rest of the day.

I think with some more work the losing trades have things about them that I should be able to work on recognizing and learn to avoid taking those entries, but it will probably take some time.

The Euro seems to retest a lot, or chop, whatever you want to call it. I think one key to trading this will be to recognize when it will chop and when it will move fast....I think I said that on here last week. If I get to the point where I can't recognize it, then another way to trade it would be to enter and move to BE fast and if it is trending quickly then it shouldn't be stopped out. Multiple entries, as long as stops can be moved to BE without taking many full stop outs, should be OK to take because eventually a trade should work as long as it's in alignment with trend expectation. I'm not working on that plan right now. It's just a back up idea in case I keep having problems with choppiness.

I've started comparing the London Open with the NY session. Whichever one seems easiest to trade is the one I'll likely focus on learning and trading.

 

[studentofthemarkets]

I need more time practicing trading on the Euro before I worry about having too many stop outs. It trades differently than the NQ and I'm not reading those differences very well. So, I'm going to not worry about drawdowns for the rest of this week, but just try to learn the rhythm of how it moves. However, I will have one rule, meant to keep me from overtrading: only 1 trade per 15 minutes.

 

[studentofthemarkets]

Decided to try to manage stoplosses and targets, at least for a while, because going for only 10 ticks is only the first part of getting a good trade. Learning trailing and how to catch a larger move is also important to focus on. And also, if I stick with 10 ticks for a target, I won't make much demo $. I tried with the NQ and the account never made much $ until I had larger targets. And it's also discouraging to only take 10 ticks when more is available (sometimes)....and I don't want to lose hope.

Also, I think I'll wait to trade in the live account. Today's trades showed I'm not ready. I kind of thought because I had some profits in the NQ, if you don't go back too far and count the losing days, that I could think of myself as almost doing well trading. I really should try to build up my demo account on the Euro first.

 

[studentofthemarkets]

Today was very difficult for me. I tried to make sense out of the Euro...and actually did call one trade right, but the chop between the entry and the target made me close too early, and the other trades were pretty much all losers. I gave up on trading every 15 min. I just tried to trade what I thought would work, and it didn't. Chop is very frustrating for me, which is why I left forex a few years ago, when I found that the equity index futures trend. It's likely that I haven't given the Euro a fair chance, but I'm done with it for now. I tried trading the NQ today but couldn't get the direction right on that either. I've decided to try the YM again...don't want to really think about giving up on trading, but I'm very close. The YM is one thing that sometimes I tend to do better on in simulated replay. So, I'm gonna give it a shot.

 

[studentofthemarkets]

I'm back to trading the Euro. Today wasn't too bad. Ended up -2 ticks. 1 loser, 1 BE and 1 ten tick winner.

Although I really don't like chop, it was the chop that saved an entry that was too early. After realizing the trade wasn't playing out like I thought it would, I placed the target at BE+1 and hoped it would be hit. It was. However, if I had let a 10 tick SL stay in place, the trade would have worked, but I likely would have closed early taking a 5 tick loss. So hard to know, sometimes, if it's better to close and lose 5 to 10 ticks or to wait and see if it'll move back towards the entry to give closer to a BE exit.