Breakouts

Great example of a trade not to take, which I didn't take

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I don't plan on trading the next two days so here are the results for June, and I have to say I am not happy.
  • Missed a good trade on AUD/USD
  • Made a mess of my exit on the Heating Oil trade and exited too early due to a problem with my calculations
  • Won't be trading stocks anymore on this account
  • A lot less trades this month. Partially due to me being more picky about the trades I take, but also there were few opportunities
  • There was a situation where my P/L for the month was £1,300 and I was long Wheat. If the wheat trade had won I would be up £3,300, happy days, if I lost I would be down to £300, not good. One trade makes all the difference. I lost.
  • Forex continues to disappoint.
  • Barely made a profit for the month with +£317.14
  • Not happy, quite despondent actually.
That's about it.

Monthly Summary:
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Monthly Market breakdown
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Overall Summary
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Overall Market Breakdown
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The "discretionary" nature of my approach is really taking it's toll psychologically. On the other hand I don't believe that a system which can be reduced to a simple set of unambiguous rules can be profitable, if it could, everybody would be relaxing on the beach as their trading algorithms extract money from the the market like an ATM machine.

That being said I need to be more formulaic in my approach, and the biggest area of uncertainty is what constitutes sufficiently strong resistance to avoid a trade. I am thinking perhaps a ranking system based on number touches and whether the level has acted as a "pivot price zone".
 
Chad Seven, I applaud your dedication to keep posting here. Such a character trait is valuable as a trader. I think you deserve some input that might (or might not) help you on your quest. It comes in the way of questions and insights. Make of them what you will.

1) What is your ultimate objective? As you've discovered this lark can be stressful. Do you have it in you to be glued to a screen all day? If not, what's your plan?
2) Trading is a 3-legged chair: Method, Money and Mind. Your Method is a work in progress. Your Money is ok-ish. Your Mind is embryonic. You seem determined, so keep going. If you're serious and humble, you'll learn quicker than most. Mind is the most difficult aspect of trading to master. Most men trade their egos, that's why women make better traders because they trade their fears.
3) Your Method: Has makings of Entry, but you don't seem to have Exit criteria/plan and your trade management is letting you down. You learn more from your losses than successes, so go back and study them.
4) Exit is subjective, so your trade management needs most attention. In my experience a good trailing stop set an appropriate distance from price allows to stay with a trend if you've caught one (thus flying past possible target price). It also keeps you in a trade when your Mind starts to sabotage you. It also reduces (never negates) that annoyance of a profit turning into a breakeven or loss.
5) You need to see each market as an individual personality and some of them are schizo. You need to know why. For example, if you enter a US index trade a day before NFP how will that market perform in the 24 hours before the numbers come out compared to the rest of the week? Do you even use an economic calendar?

Just some food for thought.

Me.
 
vaughanv said:
Chad Seven, I applaud your dedication to keep posting here. Such a character trait is valuable as a trader. I think you deserve some input that might (or might not) help you on your quest. It comes in the way of questions and insights. Make of them what you will.

Thanks.

1) What is your ultimate objective? As you've discovered this lark can be stressful. Do you have it in you to be glued to a screen all day? If not, what's your plan?
2) Trading is a 3-legged chair: Method, Money and Mind. Your Method is a work in progress. Your Money is ok-ish. Your Mind is embryonic. You seem determined, so keep going. If you're serious and humble, you'll learn quicker than most. Mind is the most difficult aspect of trading to master. Most men trade their egos, that's why women make better traders because they trade their fears.
3) Your Method: Has makings of Entry, but you don't seem to have Exit criteria/plan and your trade management is letting you down. You learn more from your losses than successes, so go back and study them.
4) Exit is subjective, so your trade management needs most attention. In my experience a good trailing stop set an appropriate distance from price allows to stay with a trend if you've caught one (thus flying past possible target price). It also keeps you in a trade when your Mind starts to sabotage you. It also reduces (never negates) that annoyance of a profit turning into a breakeven or loss.
5) You need to see each market as an individual personality and some of them are schizo. You need to know why. For example, if you enter a US index trade a day before NFP how will that market perform in the 24 hours before the numbers come out compared to the rest of the week? Do you even use an economic calendar?

Just some food for thought.

Me.
Click to expand...

Your comments is very much appreciated at this time, thank you.

1. It would be great to trade for a living. I would enjoy being my own boss and being in full control of how I work. I also am aware that with the job market is getting more and more challenging with automation and offshoring (I am looking for work after being made redundant a few months ago, I have sufficient money to support myself and trade) self employment may become my only option one day.

I am OK with being glued to screen, I have spent my career so far glued to a screen. Is that what I would like to do with my life? No, but I find myself limited by certain constraints and certain options are available or not available to me and I need to play to the cards I have been dealt.

2. " Your Method is a work in progress. Your Money is ok-ish. Your Mind is embryonic". -- Literal laugh out loud moment. Thanks for your honest assessment. I have really been surprised by the mental aspect, if I pay attention to my mind as I make trading related decisions there is so much going on and I am impacted by factors such as was my last trade a win or a loss, how much time left until the end of the month when I do my stats, things I have heard on the news, doubts, biases of various kinds. I make records of my thoughts and I look for patterns so eventually I hope with experience I will be promoted from mental embryo to fetus.

3. I thought I had the trade management all figured out but I go from one trade looking at the chart and just "knowing", to the next looking at the chart and drawing a blank, like all the experience I had built up was worthless and I look at my notes and am not being able to apply them to the situation. So yes, something is wrong. I keep detailed records of every trade, my reasons for entry, exit and any adjustments I make and what is going through my head, so again I hope to progress here through experience and hard work.

Oh I study my losses. I review my trade records every night and the whole weeks trades Sunday.

4. When you say the exit is subjective I assume you are referring specifically to my approach. I tried to make it as objective as possible by setting target at distance of triangle height but I noticed (and was surprised) that the move is often not powerful enough to break through resistance levels obstructing my path and taking these into account has really made the exits subjective, yes, and it is something I am still not comfortable with. I like your trailing stop idea, it's something I shall need to think about and do some testing of.

5. No I don't follow the market specific news as I believe "everything is in the price". I do look at the news when analyzing losses and I haven't found that following the news would have changed much. That being said this is something I shall consider.

I hear you regarding market characteristics. I believe my approach should work on all markets (he says as he is looking at a 0% win rate on forex) but I should be aware of idiosyncrasies of each market and I do take notes when I notice something about a market. One of the items on my pretrade checklist is to review notes I have taken regarding the particular market being traded.

Thank you again for your comments. I probably have not come across very humble. I feel now like I am on the right track but also slightly daunted by how much work I have to do.
 
I have been doing some thinking.

There are broadly three outcomes when my trades get executed:

1. trade gets executed and a significant move results
2. trade gets executed, retraces and stops me out, then a significant move results
3. trade gets executed, retraces and stop me out and the price does not recover.

I can eliminate the getting stopped out factor in scenario #2 by trading options. One of the challenges to this approach is my "broker" only offer options on a subset of the markets I trade.

If I chose to pursue this I could change broker, perhaps to a proper options broker. Another 'option' is to start trading stocks for which my broker offers options, although these are negotiated over the phone. Trading stocks would also have the advantage of a larger universe of instruments and I would be able to focus on setups on higher time-frames.
 
Speaking of not taking trades, I didn't take this Silver trade as there was what I predicted would be significant resistance near my entry which is marked with thick red line. Price blew right through it.

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Long GBP/USD.

It is remarkable how often this happens, the moment my order is filled the price pulls back. Is there something special about my entry points, or does God hate me?

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GBP/USD closed.

Not only have I ended the forex curse, I did it in style with the biggest win to date!

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Previously I was just keeping screenshots of the trades I don't take. Now in the spirit of "what gets measured gets managed" I am recording the outcome of those non-trades in a spreadsheet.
 
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