Working on Consistent Profitability

Not too bad a day. Market was pretty slow moving an unexciting, as it has been, through most of the day. After my first trade, for me, its was a bit hard to see what was going on since there was this "megaphone" pattern forming, followed by some consolidation. I was gone for teh breakout around the 1141.00 range at 10:35ish doing personal stuff, but I don't think i would've taken that trade anyway...it was pretty slow moving and at that point it would need some momentum to break thru the 1143.50 level, so the R:R wasn't there anyway. But overall, not a bad day.

Trade 1:

6:39- Short 1141.75 Stop 1144.00 Target 1137.50
6:49- Move stop to B/E
6:54- Stopped out buy to cover at B/E of 1141.75

+0.00 pts

Another B/E trade...this is why I posed the question(s) earlier in the day based on this trade. In hindsight, I should've just exited because it consolidated for a couple minutes, then flipped the other way. And instances, such as these, are the areas where I still need major work. I am perfectly happy taking 2 points and missing out on a couple if the direction continues, but at this point, I am unsure if this is a poor line of thinking. Am I just more comfortable taking 1-3 points per trade and don't like the anxiety of trades going the wrong way? This topic will be revisited over and over until I figure it out.

Trade 2:

12:36- Short 1141.00 Stop 1142.75 Target LOD of 1138.50
12:46- Move Stop to B/E
12:52- Buy to cover at Target of 1138.50

+2.50 pts

I took the entry on this trade pretty conservatively. The 2-4 minutes leading up to the trade, I couldn't tell if it was just a pullback and it was going to continue higher, or if it really was going to break down. So I waited for more confirmation on the 5m bars after price broke below the 1142.50 mark. Then on the exit, I may have been a bit premature, I was happy it hit the target so I just exited, but at that point there really was no pressure coming from the buy side so I probably could've hung in there for another minute or two and gotten another 0.75-1.00 pts out of the trade. But on the flip side, when the market pulls back that fast, it could bounce back up pretty quick as well.

Total Trades: 2
Winners: 1
Losers: 0
B/E:1
Total Points: 2.50
Avg. Win: $125
Avg. Loss: $0
Total Win: 50%
Total Profits: $125


Again, I need to revisit the B/E and/or taking profits dilema. I am sure this is a common problem amoung new traders so anyone feel free to chime in. The problem I have with B/E's is that they are basically a loss in terms of stats. I guess I would rather see a 0.25-0.75 win with the potential to reenter the market, than a B/E. I still have the option to reenter after a B/E, but for me, the B/E's are a fairly emotional stab and Im a little flustered for a couple minutes after getting a B/E. Keep trading...gotta work through these things.
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Quote from tlow:

Again, I need to revisit the B/E and/or taking profits dilema. I am sure this is a common problem amoung new traders so anyone feel free to chime in. The problem I have with B/E's is that they are basically a loss in terms of stats. I guess I would rather see a 0.25-0.75 win with the potential to reenter the market, than a B/E. I still have the option to reenter after a B/E, but for me, the B/E's are a fairly emotional stab and Im a little flustered for a couple minutes after getting a B/E. Keep trading...gotta work through these things.
More...

I've been doing review of each day for a couple months now to determine the P/L difference between leaving initial stops/targets in place, and moving stops to b/e after price moves a certain distance in my favor.

IF I'm focused and alert enough to re-enter the trade after a b/e stop out assuming the initial setup remains valid (as in "the initial stop was not taken out and price is coming back to your b/e stop price"), the re-entry is nearly always a heat-free trade. Problem is, I sometimes miss the re-entry for a variety of reasons, or I re-enter at a worse price and get stopped out b/e again. Today I had a great re-entry on one b/e stop out, but missed the re-entry on the later one and as a result covered commissions instead of making $200 when price moved through my initial target without me.

I know from my back testing that leaving initial stop/target produces more profit than moving stops to b/e as long as I trade all my valid signals, which I still don't do, so moving stops appeals to my comfort level at this point, but I try to stay ready to re-enter or reverse if indicated.
 
I'll offer a suggestion on taking profits. I would determine a logical target area before you put the trade on. A couple of ideas would be to look for the next level of support / resistance or calculate a measured move. Now that you have an idea of where you think price will go in the near term, you can decide if the risk / reward is in place for the trade to make sense.

Set your target and your initial stop and watch the trade unfold. If it looks as though attaining the target is in trouble, I would move the stop to a tick above the last tall candle in the direction of the trade, or just take a point or two and wait for the next setup. Keep in mind, that if you can consistently take a couple points a day, you can make a nice living once the account is sized up and you can safely trade more contracts.
 
Quote from riaamaan:

Keep in mind, that if you can consistently take a couple points a day, you can make a nice living once the account is sized up and you can safely trade more contracts.
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+1. If I leave with 8 ticks for the day, I'm a happy man. Also, if the first trade of the day yields more than that, I usually just take the rest of the day off.
 
Quote from riaamaan:

Keep in mind, that if you can consistently take a couple points a day, you can make a nice living once the account is sized up and you can safely trade more contracts.
More...

Ya I guess that is what I am thinking...its all about the long run and having a big enough sample size I guess. Right now my sample size isn't big enough to really know which way will work out better.

However, I can tell you 100%, from an emotional/mental side I would much rather have 2 points in my pocket than the possibility of 3 points with the possibility of it moving back to a B/E or negative.

This morning's trade was tough...I really really wanted to exit with 2 points in my pocket. But then there is the other side of the mental battle of letting my winners run/hit their targets. I guess I should've let the action help dictate my decision more instead of making it so black and white.

Nod,

I've reviewed most of my trades that went to breakeven and in most cases I should've exited when the PA turned against me with a small profit b/c a couple moments later the trade turns negative. Again, based on my small sample size I should just get out...but upon further analysis, was my trade set-up wrong? Was it a poor target that caused me to hang on to long? I need further analysis to answer these questions.

I guess Im going to need a bigger sample size and organize my trades more carefully. Ie in set-up "A" an appropriate target is 7 points, but 10% of the time its going to reverse to B/E. So just deal with that 1 in 10 chance it doesnt work out?
 
midday update since Im bored...

Trading is going so-so today. Made some small mistakes and I hesitated on two entries, so I missed the trades, both of which would've worked out well.

Man, it is really really hard to have a mistake free day. I know Im new but Im wondering how long it will take to have a mistake free day. I feel like my errors are at least getting smaller and/or Im recognizing them sooner so thats good. Hopefully, this will lead to smaller mistakes=>less mistakes=>no mistakes=>mistakes every now and then cuz Im human.

Going to walk away from the computer for a bit...seems to help, so if I miss some entries, tough cookies, its better for my mentality at this point.
 
Tlow,

For what it's worth, it took me 18 months before mistakes became fewer and farther between, and it took another 3-4 months after that before I started recognizing my mistakes early and taking -2's or -3's instead of getting stopped out. If I make more than 2-3 trades in a day, I'm almost guaranteed a mistake, so I usually keep it to 2 trades in the morning session and then I call it a day. It's a routine that I have become confident with, so I tend to just stick with what works.
 
tlow

A while ago I posted this on Matcha's thread.

Last week I began my start up routine and as I was writing down a few notes I got a buy signal, the time of day was a bit questionable but prices pulled back and I took the long. Within a few minutes prices were approaching my initial target. I looked at the notes I had just written and moved my target up to another level. Prices traded through my higher target by 3 ticks then fell back and never returned. I was done for the day within a half an hour. When I saw that signal I had my strategy in within 30 seconds, but I never clicked that button to change from 'sim' to 'real', damn, damn damn! I didn't realize I was in sim until that evening when I was gearing up for the AM session! That winner sure tasted like a "real" trade (for hours), it was one of my best trades of the week!

"I continually monitor my susceptibility for making errors" From the book, Trading in the Zone by Mark Douglas.
 
Quote from Went Fishing:

tlow

A while ago I posted this on Matcha's thread.

Last week I began my start up routine and as I was writing down a few notes I got a buy signal, the time of day was a bit questionable but prices pulled back and I took the long. Within a few minutes prices were approaching my initial target. I looked at the notes I had just written and moved my target up to another level. Prices traded through my higher target by 3 ticks then fell back and never returned. I was done for the day within a half an hour. When I saw that signal I had my strategy in within 30 seconds, but I never clicked that button to change from 'sim' to 'real', damn, damn damn! I didn't realize I was in sim until that evening when I was gearing up for the AM session! That winner sure tasted like a "real" trade (for hours), it was one of my best trades of the week!

"I continually monitor my susceptibility for making errors" From the book, Trading in the Zone by Mark Douglas.
More...

I remember reading your post in Matcha's journal about that...total bummer. I understand that mistakes and correcting them are on going processes. I also understand that it is different for everyone in terms of time in minimizing those mistakes, some people may be 1-2 months others maybe 1-2 years, whatever the case may be.

I think that was some of my problem last week as well...forcing the learning process.
 
Rough day today...just a lot of mistakes...nothing huge, but a lot of small stuff is what got me. Gonna go thru trade by trade in detail here to check on some mistakes. Definitely a learning day.

Trade 1:

6:36- Short 1136.00 Stop 1138.50 Target 1133.00
6:40- Move stop to B/E
6:43- Buy to cover at 1134.00

+2.00 pts

I got nervous and just got out when price retraced/turn back against me. My mistake was I should've either 1.) just put in a limit order at my target or 2.) hang on thru the retrace and see what happens...there was still a fair amount of downward pressure so either one of these options would've been the way to go, I left at least 1 point on the table. Too bad b/c this would've been a really good trade if I chose either of the proper options

Trade 2:

7:00- Short stop order at 1129.00 Trailing stop of 3 pts Target 1124.00
7:02- move stop to B/E
7:03- stopped out at B/E

+0.00 pts

Fairly negative news came out about consumer confidence and it bounced around a bit before going down. Decided to go in on a stop order if it decided to go down a trail the stop since it was likely to bounce around a bit...I wanted to keep this trade as low risk as possible, so as soon as the price went in my direction I moved to the stop to B/E. Not a bad trade (I guess, maybe pros can weigh in), just didn't work out.

Trade 3:

7:44- Long 1135.25 Stop 1132.75 Target 1137.50
7:55- Sell to close at 1134.75

-0.50 pts

This was a total crap trade from start to finish. My mistake was not waiting for better confirmation on the 5m bar and going long at 1136.00 instead. Then I compounded the error b/c I was not comfortable with the trade and I knew it was crap. I should've either 1.) exited right away since I knew the trade was crap to start or 2.) hung on was price went in my direction. I exited in no mans land. Also, the breakout wasn't that strong.

Trade 4:

10:40- Short 1141.25 Stop 1142.50 Target 1137.50
10:53- Stopped out buy to cover at 1142.50

-1.25 pts

I think this trade was the right idea, it just didn't work out. Again, feel free to correct me or tell me otherwise. The market was a bit choppy and had just going thru an uptrend but this was like the 5th test of this level and it didn't get thru. Not sure if I would've done anything different, maybe sold at B/E when price turned hard the other way, but thats easy to say in hindsight.

Trade 5:

11:54- Short 1137.00 Stop 1139.00 Target 1133.00
12:08- Stopped out buy to cover at 1139.00

-2.00 pts

I knew my error on this trade pretty much as soon as I entered. Again, I should've waited for better confirmation on the 5m bar and shorted with a stop order at 1136.25. I think I got anxious and trigger happy when I saw price starting to break down. That would've kept me out of this trade as price then reversed back up into the channel area stopping me out. At this point, its pretty obvious the market isn't going to go down much if at all. So I went looking for some long trade set-ups. Maybe I was a little late seeing this, but it was hard since there was a fair bit of back and forth throughout the day.

Trade 6:

12:35- Long 1142.25 Stop 1140.75 Target 1146.25
12:41- Move stop to 1141.75
12:44- Stopped out at 1141.75

-0.50 pts

Errr...moved the stop to close to the top of the channel/resistance area, a more appropriate stop would've been at 1141.50. Got stopped out on a long tail. This one hurt b/c it was pretty basic mental error. Also, looking back at my target 1145.75-1146.00 would've been more appropriate b/c that is about 1150.00 on the Cash S&P where it would need some push to get thru.

Trade 7 (lets try this again):

12:46- Long 1144.00 Stop 1142.00 Target 1146.25
12:55- Move stop to B/E
12:57- Stopped out at B/E at 1144.00

+0.00 pts

Tried to play the long side again on the continuation as a reentry. Again, if I had a little better target would've exited for a small profit but on the flip side there was a fair bit of momentum running up to that level. I realized that the 1150.00 mark on the cash index was the better target a little late. I probably should've just gotten out with 0.25-0.75 pts of profit once price bounced off the 1150.00 on cash and came back down. Oh well, didn't work out, Im not kicking myself about this one.

Missed trades:

I missed 2 trades that Im somewhat kicking myself for because I hesitated just long enough not get the order in...

Missed trade 1:

8:20- Long 1137.50 Stop 1134.50 Target 1141.50

I sent in a stop buy order but I was just a little late and it rejected the trade because it turned into a limit order almost at the exact same time I hit send. I probably could've gotten in at 1137.75 but I decided not to chase the trade since I messed up by not being johnny on the spot with the entry.

The other missed trade was taking a bounce off the bottom of the channel at 10:10 for an entry around 1138.00 again with a target of 1141.50. This is the same hesitation I've had before with the midday doldrums when a channel is formed and Im slow to pull the trigger. i think this was a good trade to look at since the market was still in an uptrend and found support twice at the 1137.50 level. Just need to be more confident in these trades, not sure why, I guess middday doldrums gives me the hesitation...again, this trade would've worked out nicely.

Heres the stats on the day:

Total Trades: 7
Winners: 1
Losers: 4
B/E: 2
Total Points: -2.25
Avg. Win: $100
Avg. Loss: $53.125
Total Win: 14.3%
Total Profits: -112.50

Again, no massive mistakes...maybe trade 5 since that wasn't so good, but a bunch of medium sized mistakes today. Im comfortable with how the day wound up b/c Im chalking up to a learning day, but I am still making some of the same mistakes over and over. Need to correct these if Im going to move forward and become consistently profitable.

Will get a chart out showing my mistakes a bit later...I gotta run.
 
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