Finally I'm starting my trading journal. I have a lot to say before we start. I will be posting installments this week and will start trades in the journal next week.
Pete's Place
- Thread starter PetaDollar
- Start date
Two reasons for running this journal:
(1) To learn. There is a lot of trading talent running though these boards. For months I have been watching folks get all kinds of great advice. Curiously, it seems like most of those getting the good advice would rather fly against it. Not me. I know that however good a trader I am, there are always better, and I can always improve by listening to the right people.
(2) To teach. It's the American dream, baby. Capitalism at its finest. Joe Six-pack can make money if he takes the time to learn how. Maybe I can help some guy make a better life for his family. I'm not worried about fully disclosing my methods because I know most of the few people who see it won't give a rat's ass, and those who do will trade their own way anyhow. It's the not the method but the mindset that matters in the long run. I'll be behaving like a winner trader and folks can watch my example. That's something I can do no matter how my luck goes.
With (1) and (2) in mind, you can post whatever the hell you want here. My only pet peeve is holier-than-thou eggheads. First off, i'm an egghead, a physicist. But I don't bring advanced math or physical models to trading because I know that'd be like showing up at the golf course with a freaking bowling balll-- it doesn't belong there. Trading is about buying low and selling high. Poker has much more to do with it than differential equations. Newton himself said he could not model the "madness of people" referring to speculators. So I don't know why Joe Highpoweredmath thinks he can.
(1) To learn. There is a lot of trading talent running though these boards. For months I have been watching folks get all kinds of great advice. Curiously, it seems like most of those getting the good advice would rather fly against it. Not me. I know that however good a trader I am, there are always better, and I can always improve by listening to the right people.
(2) To teach. It's the American dream, baby. Capitalism at its finest. Joe Six-pack can make money if he takes the time to learn how. Maybe I can help some guy make a better life for his family. I'm not worried about fully disclosing my methods because I know most of the few people who see it won't give a rat's ass, and those who do will trade their own way anyhow. It's the not the method but the mindset that matters in the long run. I'll be behaving like a winner trader and folks can watch my example. That's something I can do no matter how my luck goes.
With (1) and (2) in mind, you can post whatever the hell you want here. My only pet peeve is holier-than-thou eggheads. First off, i'm an egghead, a physicist. But I don't bring advanced math or physical models to trading because I know that'd be like showing up at the golf course with a freaking bowling balll-- it doesn't belong there. Trading is about buying low and selling high. Poker has much more to do with it than differential equations. Newton himself said he could not model the "madness of people" referring to speculators. So I don't know why Joe Highpoweredmath thinks he can.
I trade pullbacks. I developed my method starting with a very nice little thing that Nqoos put on his website. Here's a link to it:
The Floor Trader System
Don't mind the long intro (a story about a good trader blowing up). The story makes a good point though:
Your past performance and greatness means nothing to the market.
Put another way, behave properly and you will reap rewards. But if you behave like an idiot, even for a short time, you will pay dearly. Every day when you sit down you make the choice on how to behave.
Anyway, back to the method. There is a lot more information in the document than I actually use. There is also a lot more information not in the document that I do use. That's why I need this next week to tell you about all the details. There are just so many aspects to discretionary trading.
The Floor Trader System
Don't mind the long intro (a story about a good trader blowing up). The story makes a good point though:
Your past performance and greatness means nothing to the market.
Put another way, behave properly and you will reap rewards. But if you behave like an idiot, even for a short time, you will pay dearly. Every day when you sit down you make the choice on how to behave.
Anyway, back to the method. There is a lot more information in the document than I actually use. There is also a lot more information not in the document that I do use. That's why I need this next week to tell you about all the details. There are just so many aspects to discretionary trading.
First a general observation. In every endeavor i've seen the same thing: people want to buy something to make them better at it. And it's the same story every time: either you practice hard and make a commitment in your life, or you will suck at that endeavor. It doesn't matter what you buy. Hard work is always the real answer. Tiger Woods could beat me at golf if I used the best equipment available and he used a broomstick. But Tiger can play because his life is dedicated to golf. With his natural God-given gifts he beats the other pros, but he is not a pro because of his gifts-- he's a pro because he's dedicated.
I use Interactive Brokers for trading and Farr Financial for backup. Everyone knows about IB, a great discount broker. Farr charges $20 a round turn, but they have a 24-hr phone order desk and offer a wide variety of products. If something crashes and burns while I have an open position, I know I can call Farr and hedge if I need to.
I use Sierra Charts for charting. It's somewhat of a Royal Pain at first to have to collect data, but not bad once you're used to it. The main thing is you can't beat $7 a month.
I have a generic Chinese computer which I paid $500 for including monitor.
I have a DSL connection with SBC. Very reliable, only down once in the 1.5 yrs i've had it.
For a backup computer I have to drive to work, about 10 min away. I have a T1 line there and plenty of computers.
I use Interactive Brokers for trading and Farr Financial for backup. Everyone knows about IB, a great discount broker. Farr charges $20 a round turn, but they have a 24-hr phone order desk and offer a wide variety of products. If something crashes and burns while I have an open position, I know I can call Farr and hedge if I need to.
I use Sierra Charts for charting. It's somewhat of a Royal Pain at first to have to collect data, but not bad once you're used to it. The main thing is you can't beat $7 a month.
I have a generic Chinese computer which I paid $500 for including monitor.
I have a DSL connection with SBC. Very reliable, only down once in the 1.5 yrs i've had it.
For a backup computer I have to drive to work, about 10 min away. I have a T1 line there and plenty of computers.
Practice is a large part of my daily routine. Sometimes even while I have real trades going, i'm paper trading too.
Every endeavor has a different relationship between practice and the "real thing". In most things, you start with other newbies and work your way up. There are two extremes: military service and trading. If you join the military, you might practice and train your whole time in and never see combat. Trading is the opposite extreme. A guy may not know his proverbial ass from a hole in the ground, but if he has $2k he can be up trading 4 S&P emini contracts in no time!
Many new traders fall into this trap. They start with no real knowledge or training. Each trading day is a different method, a different indicator, a different style.
How about trading one method for a month and seeing how it goes?
The other question is "how do you train." The best answer is real time "paper" trading. Maybe an equally good answer is with real money but the smallest position possible. The reason why is that emotions are different when real money is on the table. The sad truth is there is nothing like the real thing so it's hard to train. But I do what I can.
Real-time paper trading means you are looking at the same charts, quotes, or regular gizmos that you're going to look at with real money on the table. You've got to do it when the market is open during your regular trading times. You click in buys and sells and the computer keeps track for you. There are several programs you can use for this. I use TSim+ because it is simple, it lets me add notes, and I can also use it for real trading. This way practice trading and real trading are as close to the same thing as humanly possible.
Every endeavor has a different relationship between practice and the "real thing". In most things, you start with other newbies and work your way up. There are two extremes: military service and trading. If you join the military, you might practice and train your whole time in and never see combat. Trading is the opposite extreme. A guy may not know his proverbial ass from a hole in the ground, but if he has $2k he can be up trading 4 S&P emini contracts in no time!
Many new traders fall into this trap. They start with no real knowledge or training. Each trading day is a different method, a different indicator, a different style.
How about trading one method for a month and seeing how it goes?
The other question is "how do you train." The best answer is real time "paper" trading. Maybe an equally good answer is with real money but the smallest position possible. The reason why is that emotions are different when real money is on the table. The sad truth is there is nothing like the real thing so it's hard to train. But I do what I can.
Real-time paper trading means you are looking at the same charts, quotes, or regular gizmos that you're going to look at with real money on the table. You've got to do it when the market is open during your regular trading times. You click in buys and sells and the computer keeps track for you. There are several programs you can use for this. I use TSim+ because it is simple, it lets me add notes, and I can also use it for real trading. This way practice trading and real trading are as close to the same thing as humanly possible.
Any Marine can pop some fool from 500 meters away EVERY SINGLE TIME. There's a good reason why (see "Practice").
Quote from peterfigliozzi:
Any Marine can pop some fool from 500 meters away EVERY SINGLE TIME. There's a good reason why (see "Practice").
Peter, I would like to comment on equipment . I think that a recent issue computer is a must because daytrading is much about speed .
Like marine will not drop too many from 500 meters without the scope, good hardware is essential for a daytrader.
I have a feeling this will be an excellent tread .
Thanks,
Walter
On second thought it'll be easier if I post a trade and talk about the method as we go.
Here's a chart with today's action, just one trade for me (should have been two, missed one).
In this case, I am applying the 9-18 SMA pullback method to the NQ's on the 200-tick chart. (The charts I use for entries are the 90, 200, 300, and 875 tick.)
There was a trade early morn (which would have been great), I didn't take it because my longer term trend indicator was pointing down at the time. I only take trades in the direction of this longer term trend. (I will write more about it later.)
The 2nd signal, which I did take, is my favorite setup of all-- a pullback after passing though support or resistance. Today's feature S/R line was yesterday's high (YH), shown by the dashed blue line. (I draw yesterday's high and low in before the market opens.) Remember I am coming into the day looking for a short. By 10 am (Central time, shown on the chart) we broke back down through YH, then pulled back against it. This pullback is where I entered. It was the "inside" version of the 3-bar pivot, which candlestickers will recognize as a 3-inside-down.
The trade was great off the bat. The blue trendline I drew upon entry, as a guide on how a good trade should behave. I keep my initial stop right above this line and adjust accordingly.
But guess what. The mother reversed and I was out with +0.5, a measly tick. I am human. I was pissed. But my edge is I don't trade stupid after things like this happen.
Shortly after this my longer-term trend changed to up, and there was a good long signal on the 875-tick, but I was sleeping and missed it. So only one trade today.
Here's a chart with today's action, just one trade for me (should have been two, missed one).
In this case, I am applying the 9-18 SMA pullback method to the NQ's on the 200-tick chart. (The charts I use for entries are the 90, 200, 300, and 875 tick.)
There was a trade early morn (which would have been great), I didn't take it because my longer term trend indicator was pointing down at the time. I only take trades in the direction of this longer term trend. (I will write more about it later.)
The 2nd signal, which I did take, is my favorite setup of all-- a pullback after passing though support or resistance. Today's feature S/R line was yesterday's high (YH), shown by the dashed blue line. (I draw yesterday's high and low in before the market opens.) Remember I am coming into the day looking for a short. By 10 am (Central time, shown on the chart) we broke back down through YH, then pulled back against it. This pullback is where I entered. It was the "inside" version of the 3-bar pivot, which candlestickers will recognize as a 3-inside-down.
The trade was great off the bat. The blue trendline I drew upon entry, as a guide on how a good trade should behave. I keep my initial stop right above this line and adjust accordingly.
But guess what. The mother reversed and I was out with +0.5, a measly tick. I am human. I was pissed. But my edge is I don't trade stupid after things like this happen.
Shortly after this my longer-term trend changed to up, and there was a good long signal on the 875-tick, but I was sleeping and missed it. So only one trade today.
The chart was cutoff, but you can see the trade I was talking about.