More a dear diary than a journal

[caprica1]

I've not been on here for a loooong time. In fact when I finally found my log in details and looked at my past posts it's November 2014 since I've posted anything and there's a ton of stuff changed since then. Personally and the world in general.

This is more of a diary than a journal. I've been smashing my head and accounts with this trading lark for a long time now and have yet to make any money at all.

I've tried it all but can't seem to make penny but also can't seem to give up trying either.

I'm in my most recent cycle at the moment. thought I've found something. Done my back testing and starting live trading and all going well then the wheels fall off. I'm reflecting and trying to understand what I'm doing wrong, where I'm going wrong, what I need to do to improve and become successful.

Success is different for everyone. For me, at this point in time. Success looks like not blowing another account. No being in a loss every day. That's my success at the moment. I've spent time doing FX over 10 years ago. Moved to the indicies which is where I still find myself.

I guess I don't really understand who I am as a trader. I don't know what my strategy is so I can't trust anything and flip flop about. I'm really interested in fading the opening gap and have been trying to find as much as I possibly can out about it. Recently searching for anything by Scott Andrew's to help me in my learning.

I'm just sat here typing this though feeling frustrated and confused at the moment.....but still not able to give up.

 

[barjon]

I've not been on here for a loooong time. In fact when I finally found my log in details and looked at my past posts it's November 2014 since I've posted anything and there's a ton of stuff changed since then. Personally and the world in general.

This is more of a diary than a journal. I've been smashing my head and accounts with this trading lark for a long time now and have yet to make any money at all.

I've tried it all but can't seem to make penny but also can't seem to give up trying either.

I'm in my most recent cycle at the moment. thought I've found something. Done my back testing and starting live trading and all going well then the wheels fall off. I'm reflecting and trying to understand what I'm doing wrong, where I'm going wrong, what I need to do to improve and become successful.

Success is different for everyone. For me, at this point in time. Success looks like not blowing another account. No being in a loss every day. That's my success at the moment. I've spent time doing FX over 10 years ago. Moved to the indicies which is where I still find myself.

I guess I don't really understand who I am as a trader. I don't know what my strategy is so I can't trust anything and flip flop about. I'm really interested in fading the opening gap and have been trying to find as much as I possibly can out about it. Recently searching for anything by Scott Andrew's to help me in my learning.

I'm just sat here typing this though feeling frustrated and confused at the moment.....but still not able to give up.

It’d be presumptuous to proffer advice, but I was struck by your comment ”...thought I’ve found something”. There may be something to find in terms of an appealing strategy but, in terms of success, I don’t think there is anything to find that will automatically give you success. In my opinion success relies on the skill of the trader and centred primarily on how trades are managed.

 

[caprica1]

it's such a frustrating feeling spending so many years at this and not having anything to show other than blown accounts. That phrase keeps coming to mind about doing the same thing and expecting different results. I'm starting to think the only common denominator in my experience so far is me rather than the markets or strategies.

 

[0007]

Reading Barjon’s post at #2 it’s quite likely that I am being presumptuous in offering some advice so I do hope you’ll take it in the well-meaning spirit that it's offered! You’ve probably heard it all before but that doesn’t make it any the less worthwhile.

You've rightly identified that you need to find out what it is that you are doing wrong – that is one of the first steps to being successful. At this stage I would suggest that finding the "right" system or trading instrument is not important because that will be more appropriate later when you have gained some expertise. I don't think your situation is unusual but the only way you will overcome it is to do some logical analysis of what you've been doing so far. That means keeping good records capable of being analysed – done properly it will require discipline, but without discipline you will never be truly successful.

Your post suggests a rather haphazard & disorganised approach which, based on my experience is typical of early stages trading. So you need to get properly organised. Here's a plan.

• Stop trading with real money.
• Choose any "off-the-shelf" system eg. moving average crossover and trade it on a demo platform. We’re not bothered whether the system is any good because we are using it as a learning vehicle. In fact you will probably learn more from a system that doesn't work for some of the time. The MA crossover is a good teacher because it only works well under certain circumstances and part of your learning is to analyse how / why & how you can cope with it. Also, start on the beginners slopes of EOD. Short timeframes and day trading I would suggest are for people who know what they are doing. You say that “I’m really interested in fading the opening gap “ but I would suggest that’s not suitable territory for a trader still feeling his way. Astronauts and test pilots (who were critically selected for having the right qualities – and we don’t do that with traders do we!) all started their flying careers in a simple puddle jumper aircraft rather than a “top gun” machine.
• Do enough trades to build up sufficient data for analysis. I would suggest something between 50 and 100 and it is essential to keep good records. You’ll get fed up with doing that but nobody said it would be easy! The more data you collect the better: it may seem superfluous at the time but much later on, with your increasing post-trade analysis expertise you will be able to make good use of it.
• Before you start trading make sure you understand your system and what its rules require. For the time being stick to one set of instruments e.g. a small number of Fx pairs, a particular index, FTSE 100, S&P 500 – it doesn’t matter which but do keep it constant during your trials & testing. The more variables you introduce the less likely you are to identify where the problem is.
• Having got to know your system & its rules and requirements thoroughly, you will need to concentrate on yourself. If you don’t know what your shortcomings are already then after a dozen or two trades you should see a pattern emerging albeit good or bad. E.g. If you have trouble with cutting your losses then it will be apparent from your data. But it’s no good just identifying a problem, you have to come up with a solution and most importantly, put it into practice.
• After you have done 30 or so trades take a break and analyse everything. First of all identify what has gone wrong and what has gone right, and then find the causes, then construct the remedies which you will employ in future. At this stage it will be helpful to go back over your early trades and a assess them. Ask lots of questions. Would you enter this trade again? Why was it successful / unsuccessful? If you correctly followed your rules and methodology but the trade still was unprofitable you must establish the reason. Was it you? Was it your system? Or was it just the market not doing what your probabilities said it probably would? You must just keep asking every question and get to the bottom of what went right or wrong. Don’t forget that even if you have done everything perfectly you will still get unprofitable trades – or even a run of them. That is why it is so important to keep as many things as possible constant thereby making it easy to identify the causes of unprofitability (and profitability).
• In order to analyse your trades accurately & easily a spreadsheet is the ideal tool. It’s worth learning the basics if you are not qualified. If the software really is beyond you then just use good old-fashioned paper and pencil and calculator – it works just as well and is what was done before the days of spreadsheets.
• After 50 + trades take some time out and do a full review. Draw conclusions. If you haven’t learnt anything then you’ve not done the review properly – go back over the data again and work through each trade again until you understand it all.
• After 100+ trades you should have some idea about yourself and trading method. You can now apply your skills to a different system. Hopefully, by this time you will have learnt enough and been thinking enough to perhaps dream up your own system. Have a go. The chances are it probably won’t work brilliantly. Doesn’t matter, analyse & learn. Then reiterate the process.
• At some stage you will feel confident enough to trade with real money. The whole process you’ve just been through with the last hundred trades or so now starts again and new lessons will have to be learned. If it goes awry then revert to paper, reiterate the whole process. Eventually you will get there.
  

The key thing is to collect your trade data, analyse it, draw conclusions, and put them into practice. Constantly review and reiterate. It’s a long, hard, tedious process but you’ve already experienced tedium for a number of years – so you’re already in good practice and that shouldn’t therefore be a problem.

You may think this is all very basic stuff for someone who’s been trading for some years but the truth of the matter is, by your own admissions that you are still at the beginners stage. Nothing wrong with that we were all there once upon a time. Good luck with all of this – there is no need to throw in the towel yet. But it isn’t really a question of luck. It’s hard work/analysis/reasoning that will pay off (literally) in the end.

 

[caprica1]

@0007 thanks for your really comprehensive reply. Means a lot that someone has taken the time to write such a reply.

I'm feeling like my issues fall into a couple fo different camps.

Mental is certainly one of them. Not understanding my emotional triggers. What makes me want to "show the market" after some bad trades as an example.

Strategy is the other. Or however you want to label it. With no real clear strategy researched I don't know if the losers are because of me doing something stupid (most likely lol) or are part of the natural course of having winning and losing trades. With that it then feeds into the mental stuff.

Having a plan. Knowing what or why I'm trading and like you said not spreading myself thin is clearly something I need to really knuckle down to.

 

[0007]

@0007 thanks for your really comprehensive reply. Means a lot that someone has taken the time to write such a reply.

I'm feeling like my issues fall into a couple fo different camps.

Mental is certainly one of them. Not understanding my emotional triggers. What makes me want to "show the market" after some bad trades as an example.

Strategy is the other. Or however you want to label it. With no real clear strategy researched I don't know if the losers are because of me doing something stupid (most likely lol) or are part of the natural course of having winning and losing trades. With that it then feeds into the mental stuff.

Having a plan. Knowing what or why I'm trading and like you said not spreading myself thin is clearly something I need to really knuckle down to.

Glad to be of some help. I think that mental issues are the most difficult to handle and I hope the following, which is just one way of tackling the problem is of some use. Once you have the basic mechanics of trading under your belt it then becomes a matter of how you handle the trades and not particularly your methodology or the instrument trade. But of course, it's also important to find a system and instruments that are suited to you. I always think that the "Market Wizards" narrative illustrates this well: all the Wizards are very successful yet they all use different methodologies – so it's got to be down to the individual hasn't it?

In our first steps we will have identified the straightforward mechanical things that are either right or wrong and can therefore be easily analysed & solutions constructed. We are then at the next stage, which is the difficult bit, of applying the solution. This is where your mind and emotions begin their distortions. Over the years I've developed my own technique for handling this.

Here's an example. Let's say you have problems with adhering to your stop loss (this is just an example, it could be any rule). It's highly likely that the subconscious is in control of your emotions and thus overriding what your rule specifies. Even though you really know that you should obey your rule, you still don't do it. So how can you correct this shortcoming and get it out of your mindset?

(1) The first thing to do is to introduce some doubt into the misapprehensions of your subconscious by confronting it with some shock treatment! There is no need to wire up the electrodes just yet – just do this: list the trades where you ignored / amended your stop loss instead of honouring it. Then recalculate the P/L as if you had obeyed your rule. The resulting improvement ought to convince both you and your subconscious your rule should have been followed. Of course, it's possible that the odd trade might have turned out better by ignoring your rule, but if your rule is a good one that's been well researched and tested then you should ignore these instances even though they will dangerously appeal to your subconscious.

(2) Now that you have planted the seeds of truth in your mind it is time to encourage their growth with some fertiliser. Get your historic data out and do 20 or 30 paper trades making sure that they are spread out over a decent period – otherwise you may get distortions from a particularly bullish or bearish phase. Stick to your rule (e.g. stoploss) religiously. There will be limited pain because you're not trading real money. But what you are doing is ingraining the correct action into your subconscious. This is a good training technique where it is necessary to make certain actions/reactions an automatic reflex when the natural reaction is to stop and have a think about the situation. It is in fact a "drill". It's how your airline captain is trained, so that when he suffers engine failure during takeoff he immediately takes appropriate corrective action.

(3) When you think this is all firmly rooted in your psyche you can go back to real trading & discover whether or not you've cured the problem. Be aware that it will now be more difficult because you are dealing with real money and the old, bad emotions will try to resurface. If the problem re-occurs, immediately go back to step (2). Carry out reiterations until you've cured the problem. Also be aware that it's a bit like alcoholism – it's always lurking there in the background waiting for an opportunity to reinstate itself.

I've found that this method works – eventually!

 

[caprica1]

So I've spent some time since my last post going right back to basics. @barjon has been helping in the background which has been really appreciated.

So what have I been doing when I say going back to basics. I've just been looking at my charts on an hourly and daily TD and marking off the most obvious support and resistance levels. Once I've done that I'm then thinking about what sort of trades I want when/if price gets to those levels. The 2 most obvious trade setups are reversals off the level which is initially only looking like 20 or 30 point trades.

I've then got the option to look at my second trade setups which is when price comes back to the level. Does it setup a breakout trade with another rejection or does it go straight through the level and extend but then pull back and that level then acts as a base or ceiling for a continuation of the breakout.

 

[caprica1]

Almost a fortnight since my last post that time has gone so quickly. I've been working hard at my mental discipline and emotions and trying to be aware of them when trading or after trades but alsotake some actions rather than just being aware of them and carrying on in the same vain.

I've started writing everything down in a blog. It's my own personal one so not something that I will be putting out for public consumption. It's cathartic writing it out in that way. I've noticed a couple of thing from my emotions after writing it down.

It's been and carries on being a good exercise. Trade wise I've certainly not set the world on fire but I feel more disciplined....at the moment. I've been down this road before and then do something utterly stupid. I'm trying really hard to not do that.

It feels almost akin to what I imagine an alcoholic might feel like being sober and constantly fighting the urge to do something stupid to undo all the hard work. All be it on a much smaller and different scale of course.

 

[caprica1]

This week has been pretty good. My discipline the last couple of weeks has also been good.

Setting my levels and waiting for them and not doing anything stupid in between.

Thought it interesting to download a trading statement for July from my broker account. It's not making millions but the aim is to be consistent and improve my discipline and trading setups.

I've currently got 2 trades open from yesterday where I've managed them, taken profits and moved stops.

 

[caprica1]

Last week ended quite well. It was a positive week. I had a slight wobble mid week where I caught myself thinking about silly trading i.e sat on the couch in the evening relaxing but checking charts on my phone so not really relaxing and being struck with FOMO. Thankfully I caught myself, which sounds odd saying it, before I was able to act on it. Stopped and talked to myself.

Had a nice start to this week and then thing I'm happy with is that when I'm thinking of doing something or have just started to do something daft unlike before, I've been able to catch myself and stop. Reset. Then carry on looking for my valid setups.

 

[caprica1]

Not the greatest day today. In fact a pretty poor one. Money management has been fine. Looking over my trade log some of the intra day levels that seemed good and sensible in the heat of the moment obviously haven't turned out that way.

Need to re-focus for tomorrow. Stay sensible. Stick to my levels. Stay patient. Don't trade stupid. Still a really good month though which I need to remember and take the positives from. Results wise and more importantly for me, discipline wise.

Feel like I've made some progress this month on the mental side of things and become more aware of myself and emotions. Still a long long way to go before I can call myself a "trader". I'm probably break even at best at the moment.