Yukoner's Psychological Trading Journal

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Yukoner

A quick introduction:

I've traded futures since '99, but don't consider myself a trader until 2007. (My definition of a "trader" is someone who can consistently extract money in the markets) That was when I found an edge and could consistently make money each month. It is also when I moved my family abroad, and started trading full time from our fully furnished "apartamento" five floors up overlooking the rambla and the beach. It all ended badly in the middle of 2008 when the world financial system blew up, and at the same time I had become horribly sick, on prednizone and in the hospital - still trading.

Later in 2008, I moved back to Canada, got a job and tried to recoup. During that time, I also had the opportunity to do some work for Denise Shull of Trader Psyches. The next 14 months gave me a very interesting opportunity to learn more about trading psychology, and it also taught me that traders everywhere struggle or have struggled with the same things. We are all human.... 2008 certainly taught me that.

For many years, I have wanted to trade OPM (Other People's Money), and so earlier this year, 2014 I enrolled at Topstep Trader to do a combine. My first combine I made it to the end, trading three different markets, but didn't meet the metric of being profitable. However, my second combine I focused only on trading oil and on day #7 I passed the profit target of $1500 and by day #10 I had passed, and was moved on into live trader prep. (I'll continue the rest of that story another post)

I'm now scheduled to start a 50K continuous combine on Monday, November 03 with Topstep Trader. So this journal won't be about trade setups, or why I took a trade... rather it will be about the psychological part of trading. Some of what I write will be pretty raw, but it only helps me to journal if I am truly willing to confront some demons and discover some blind spots.

While in this combine, I won't be trading my own accounts, I will only be focused on trading well and making it to the goal of trading OPM. I'll be trading oil using auction market profile, and I will be flat at the end of each trading day.

I will occasionally reference people who have helped me, or people I am working with. I'm not trying to endorse them for you, but just giving credit to an idea or a person who has helped me along the way. Hopefully some of what I write will be useful to a trader somewhere...
 
So what happened when I hit Live Trader Prep? I just wasn't ready... I started to second guess everything.
"What are they thinking of my trading?"
"They are watching me"
"I am going to make so much money, I'll be the next supertrader"
"You gotta show them just how good you are... you only have a few days, so you gotta trade!"

Some of you are probably laughing right now, because you have been there to. It is like our mind just becomes unglued. Everything we were doing right, we lose a bit of money and start doubting ourselves and our method of trading.

For those of you who don't know, just passing a combine and moving into live trading or live trader prep is tough to do. You have a daily loss limit that can't be hit, or you disqualify the combine. Plus you have to be flat at the end of the day and prior to news reports. Lastly, you have a max drawdown which if you hit it, you are disqualified. Oh, and you have to be profitable in all markets that you trade. All of this within 10 or 20 days of trading today's actual live markets. (Note: These were the rules for me back in early 2014, today a little has changed, but not much.)

However, the biggest challenge I faced was at around the same time my lovely and amazing wife of almost 20 years, told me that she didn't want to be married anymore and would be leaving me in a few weeks. I won't get into the details on a public forum, but that rocked my world! If you are facing some serious emotional challenges, there is no way you can be a peak performer. Your discipline just slides off the desk... your trading money too.

Fortunately, I knew enough now not to take it out in the markets... I screwed around in a couple of combines, and I dabbled in a small trading account, but nothing too serious that would set me back much at all. I also started working with a trading psychology coach, Mark Seflin, and he really helped me through a lot of the emotional challenges. AND, I just stopped trading for a while.... as much as I love trading, trading isn't going anywhere. It will always be there.

I just needed to be patient enough to be willing to wait to trade another day.
 
So its November, and I am ready to trade. Here is my psychological strategy:

I heard Bob Iacinno say something to this effect, "In trading, if you make your strategy clear enough it takes care of a lot of the psychological challenges" That really resonated with me, and is something that I now am putting into practice. So here goes the rule list:

1) Every strategy I trade in this combine, is pre-written and so clear that my teenagers could trade it.

2) Knowing that my psychological capital can easily be depleted and my discipline fades the more I trade throughout the day, I will set fixed trading hours. I live on the West Coast, so my trading hours are 5:30 am until 9:00 am. If I am in a trade prior to leaving for my office, I will manage that trade from my office but I will not initiate a new trade after 9:00 am.

3) I will journal each trade I take, and why I take it along with any adjustments. Including screen shots. If I catch myself not journaling each trade, this is a "tell" that my discipline is fading and I need to take a 30 min break or call it quits for the day.

4) The night prior to trading I will plan out the day, how I will react and what I can expect if the market does certain things. If this, then that. However, if for some reason I don't do that nightly preparation then that disqualifies me from trading the next day.

5) I am going to try and change my language when referring to wins and losses. Rather than winning, I will say "extracting ticks".... and rather than losing I will say "contributing ticks". (Thanks Mark)

6) My focus is going to be on trading well. On staying disciplined and trading my plan. As best as I can, I will be trying to set aside the money aspect of intra-day trading, and will be focusing on the process of being a peak performer. Of consistently doing the right things over and over and over each day.

7) I will only trade when I can be completely focused. Each day prior to turning on my computer I will be doing a mental checklist of where I am at. If anything is bothering me. Is my area clean and free of distractions. How am I feeling about the day. I will then deal with whatever come up, before I turn on the computer and start trading.

8) Each day I will try and set aside 30 mins of "me time". My time to recharge my psychological capital. For myself, there is something about getting into nature that relaxes and recharges me. I live in a beautiful part of the world, so will plan on taking advantage of that.

9) Each weekend I will review my trades. I will be looking for how I could have traded my plan any better. Not if I could have made more money, or lost less money, but rather if I could have traded a position better.

10) I won't become so focused on trading that I forget my family. Single dad with two teenage boys who live with me most of the time, this new parenting role also has its demands. I can't trade well if I feel I am neglecting them at all.

11) I will verbalize how I am feeling about trading, rather than leaving it bottled up inside. This goes against my nature, but I will be working on letting it out...

12) A new thing for me, but as per Shull, I am taking the color red off of my charts. I used to have black and red candlesticks, but I have now changed this to black and blue candlesticks. Apparently in our culture the color red has negative connotations. (PS. My charts look really weird now! lol)


The start of trying to bring as much clarity as possible, and accountability, while still giving myself enough freedom to be a discretionary intra-day trader.
 
Day #1 - took my time getting into the day, making sure I felt prepared, etc. But the first trade I put on, and I felt the adrenaline hit me. My hands were shaking. I started breathing, breathing trying to calm the brain down... and that definitely helped. Got up and walked around a little. That helped me get neutral on the market, and when I saw it go back against me, I closed the trade manually and contributed 5 ticks all though I would have contributed 14 ticks if I hadn't off relaxed and seen what was happening.

I did two more trades, and with great entries but just had the worst battle holding them. Closed one out with 2 tick withdraw, and the other one even thought my target was 36 pts lower I tightened up my stop to lock 10 ticks in, even though that was against my plan, and it resulted in being stopped out about 10 mins before CL went to my target and beyond.

So now I was up for the day, and just didn't want to give that back. I know it doesn't sound like much, however the day was positive almost $60 and that is a winning day.
My 9:00 am finish time came, and I didn't want to stop trading. Was just starting to feel the day, calling the market well, and now wanted to capitalize on that. I don't even have to be in the office today, so can just trade from my nice quiet home. That was hard to shut it down... struggled with that... but I reminded myself, that if I can keep this discipline then that will pay off huge in the future.

Trying hard to trade the plan, follow the process, and know myself.
 
Yukoner said:
I did two more trades, and with great entries but just had the worst battle holding them. Closed one out with 2 tick withdraw, and the other one even thought my target was 36 pts lower I tightened up my stop to lock 10 ticks in, even though that was against my plan, and it resulted in being stopped out about 10 mins before CL went to my target and beyond.
More...

Does your plan still net a profit if you cut the winning trades by .26?
 
Does your plan still net a profit if you cut the winning trades by .26?
More...

Not long term... and I agree, that was a mistake. Adjusting that stop to lock in 10 ticks was simply done to make me feel better... felt good to get ahead for the day, and lock in some profit. However, it was the wrong thing to do. Trading isn't about doing what makes us feel good.

I also watched the final 15mins going into the close. Had to seriously fight FOMO (Fear of Missing Out) when I saw a trade setup I had identified the night before start to happen, which would have been a very profitable trade. Kept reminding myself that staying disciplined and not trading, because that didn't fit into my plan, was the correct trading action to take.

However, hours later I feel good about the day. Recognized some of my mistakes, all things that I could control, but also recognize some things I did very well.

Good Trades,
Yukoner
 
Day #2 - Woke up and actually felt a bit fearful of trading today. That nagging voice, you might lose today. I know now that is a natural reaction of my brain to uncertainity, and so I reminded myself that I was in control of a lot of things. How much I risk. When I stop trading. And after all, this was only one day... even if I ended down for the day, it doesn't matter that much.

I opened my charts, and holy smokes, did oil sell off in the overnight session. I started and thought how the heck do I trade this? I wrote in my Daily Goal - "I have a plan for trading in rain and in sunshine, but today in CL it looks like snow... so unless I see rain or sun, I don't trade."

So I waited, and waited.... and finally I started to get a feel for the market today and what was going on. I was waiting patiently for a retrace back to 77.00, but when it got there I didn't pull the trigger. I knew it was the right trade, but I was so fearful of a loss that I didn't short. Then I watched it drop 20 ticks almost right away, then another 30 ticks, then another 20 ticks. So frustrating! Today was such an easy day trading, the market just kept dropping and so many reasons to get short...

So I then asked myself, why the fear? Where was it coming it from? This might sound odd, but I could see my Dad telling me to listen to him, and do what he said. That was interesting, and I yelled out that I could do things the way that I wanted, that I didn't have to listen to him. That I loved him, but I didn't have to listen to him. I then emailed my trading psychologist some more detailed info on that... something I need to work on because my Father is really conservative and risk adverse. (PS. The yelling out loud was removing the emotional energy)

As for trading, I did two more trades before 9:00 am. One was out at breakeven, and the other was out with +2 ticks because I was on the way out the door and just wanted to scalp two ticks to cover commission and make it a winning day. However, I did place an order to sell 76.99 (60 ticks higher than the market), and as per my rules if I got filled while at my office I would then manage it accordingly.

That order got filled about an hour later, and adrenaline hit my body. Like tense, tense and my brain seriously firing up. I kept asking myself what the right thing to do was, reminded myself that I only had a little bit at risk. I fought the temptation of closing it with 8 tick gain, then closing it with a 18 tick gain... and my brain was telling me that I really should be adding to this short. I even journaled that in my notes. Ended up closing the trade out with +31 ticks, but my body was seriously jacked up. Not at all the way I would want to trade... so obviously something I need to work on.

Now done for the day +318
 
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