Allright Nwb... I like your attitude and especially your work ethic. I've been where you are prob around 10 months ago (Sept 04). I've come a tremendously long way (21 fully automated pts today in ES on 1 contract even amidst the 4 point gap loss because of today's Globex nonsense). I too am still in the 9-4 thing just out of necessity to be somewhat active and with health insurance coverage. You will probably hear over and over that you need to blow out and this that and the other from a number of people who may or may not have already mentioned this on this thread. I have yet to blowout, I won't even mention winning streak. Optimism IMO, is better than pessimism. Although I would make an effort to provide some advice to all of your questions, I'll try and address that which I believe to be the most pertinent.
Just within the first few paragraphs, you mentioned two things which strike me as nwb hurdles/hindrances 1) pessimist 2) loss...
It's odd and may be heresy, but neither of those two items is something that I believe to be relevant. The broader context for trading is money making. Where as you identify a pessimistic opportunity as short, I orient to shorts, longs, and laterals as money making opportunities. Nothing to be pessimistic about. I presume then, pessimistic for me would imply a trade moving against me (ie. failure to be profitable). I strongly believe that the optimal mindset is to be neutral/unbiased (ie. if the trend is tight and lateral, bracket for long/short money making). Then your paradigm becomes what's the next opportunity for making money... Better yet, you never need to predict ever. Not having the ability to reverse on the very next bar does have some disadvantages and thus you are limited to only half of a price cycle to make money. So be it, profit in the segment of the cycle that you are accustomed to. I would encourage you to strive to be neutrally biased (ie. seeing short opportunities just as easily as long opportunities). Eventually, you notice that these opportunities are EVERYWHERE and then you find yourself in a strange place working out where not to waste your time, better yet optimize capital efficiency of your time (I'm still trying to nail this one)
LOSSES
This is probably the toughest issue to deal with especially for a nwb. My worst loss on any single position is commision + a single tick. I feel that it is absolutely imperative to know that losses need never happen and thus the single most powerful trade is by far a wash/breakeven. Reason being is that losses only occur once the market moves back past your entry point, thereafter, losses accumulate. Any loss that accumulates after your entry is a Profit in the opposing position. Thus why hold onto anything that is losing? You'll find that Hope/Fear directly stem from the inaction to wash/breakeven. People fear the market moving back and thus exit too early, and hope that the market comes back so that there losing position can then become a winning position. Getting rid of these useless trading emotions can be regarded as an edge. I don't believe in edges but do believe that there is no place for these emotions. Some handle the emotions well and thus can manage large losses without too much heartache. The sooner one can deal with these trading emotions, the better. Personally, a wash disables both of these emotions.
With a wash. Imagine the worst case, a crap load of consecutive bars with the same exact range open and close. This is the worst case and your broker thanks you for the accumulated commission. However, no one else gains in this scenario either (well at least not on the immediate fractal, the sub fractal is possibly profiting unless your sub fractal is the T&S/Tape
). In this scenario, losses will be entirely to accumulated commission which IMO is always better than trades that continue to move against your entry. It's my belief that not washing is exactly like a deer in headlights. The deer (the trader), sees the market heading directly at them runs them over, and then past them. The damage is now done. Washing just gets you out of the way immediately. Most seam to get run over HOPING that the movement is only briefly against them (ie. a market accident). The failure to get out of the way was due to their fear of not having profited amongst other reasons, and suddenly the emotion turns into a hope of not having to realize a loss. Too many of these scenarios is bound to leave one a CRIPPLED trader (ie. blowout). Fortunately, should your worst case trade be a wash/breakeven, then you find that the above described worst case wash scenario is brief (a few bars). Then what... Ans. Profits immediately up ahead... I hope that you may find some useful information in my comments...
Kindest Regards,
G33M4K (non-BEginner)
Damn, broker, that strikes me as fuinny!!