my journal 3

Obviously, as I did for natural gas a year ago, now I am checking every possible source on what'll happen to my trade on monday.
 
Some hope from this:
USD JPY Forecast | Forex Crunch
Yet again, dollar/yen began the week with some consolidation, but eventually ended it with a weekly gain. Will this pattern continue?
Click to expand...
After conquering the 90 line, the pair could enjoy some consolidation before moving onto the next levels. The growing talk of a currency war, especially from Angela Merkel, could temporarily scare some of the yen bears and limit future moves.
Click to expand...
 
More resources on Japan:
Japan News: Headlines & Breaking News - Bloomberg
Japan News Headlines: Finance, Business & Politics - FT.com
World News - Japan | Reuters.com

From these Japanese News homepages, I found this article:
Yen Falls for 11th Week on Bets Japan Will Push It Down Further - Bloomberg
The yen has never previously lost for 11 straight weeks, according to records compiled by Bloomberg dating to 1971.
Click to expand...

Let me check:
eSignal.com free world stock market quotes and charts

esigchartspon.png

Yes, it is true.

And I am praying this was the last one.

...

Wow, I just had this amazing idea.

Considering how much risk I am taking, by having gone long with this "falling knife"... does it make sense to exit this position at break-even or even with just 2000 dollars of profit?

I mean, if it does bounce, it is likely to reach at least 1.13, after a fall like this one. After a record fall, a record bounce.

Now, by the time it reaches 1.11, I am in profit by... 1500.

At 1.12, my profit is 1500 + 6250 = 7750
At 1.13, my profit is 7750 + 6250 = 14000

Given that I've risked my entire account for this one, stupidly of course, but, given that I am in it, why not... I mean, if it doesn't bounce, it blows out my account, because i know I will not exit later given that I've not exited it with a loss of 200, then 5000, impossible for me to exit it with an even bigger loss.

So, given that I'll stay in it until my account dies, why not let the potential bounce run until 1.13?

Doesn't it make sense that if there is a bounce it will run until there?

Now this is great thinking, but the problem is making it happen, because you know, I really have to leave on a vacation to let this happen. Otherwise I am not likely to do it.

I will be too excited to even exit with a break-even situation.

As soon as I see green, I'll exit it. Impossible to wait until I see a profit of 14000, which would bring my capital to a staggering 37000.

All it takes is one week.

If it bounces, it reaches 1.13 in one week.

...

No, I won't do it.

Just as I am happier with a bigger loss tomorrow rather than taking a small loss today, I am happier taking a small profit today rather than a bigger profit tomorrow.

Tomorrow is out of the picture for me. So basically I apply the rule of "let your losses run and cut your profits short".

Damn. Of course if I were positive about JPY reaching 1.13, I'd do it, but if I were positive about anything in the markets, I'd own the world.

If I could insert a LMT close sell at 1.13, and turn everything off for a week or two, would I do it?

I probably would.

But I have to be here and run the systems, and I'll be seeing how my position is doing on a daily basis.

Yes, of course I am also forgetting incidentally that I could have my entire account wiped out as soon as the markets open in just a few hours.

Would it be worth it, after running the systems, every day, for years, without missing one day of trading, to stop running them so to let my JPY trade go wild (upside)?

I wondered for a minute, and now I think it isn't worth it.

So how do i do it?

For starters, I should remove all those LMT close sell orders in the 1.11 area.

Do I believe enough in my 1.13 target to remove my LMT orders?

What if instead this is what will happen: it will reach 1.11, it will turn back and go to 1.00, then it will bounce. By then I will be entirely wiped out, and regretting that I didn't exit.

Plus, I will be missing two weeks of forward-tested data for my systems.

You know what?

I should even lower my LMT orders to a break-even exit.

I would increase my chance of not blowing out my account, and I would not allow the market to reward a reckless martingale behavior, which is what would happen if I end this nightmarish trade with a profit.

Tell you what.

I should actually exit this trade with a loss. A loss of 1000 dollars.

Just to learn a lesson.

Not as expensive as what it was on Friday night (5000), but expensive enough to remember it.

I should not allow myself to get away from this reckless behavior with a rewarding and behavior-reinforcing profit.

I'll be changing it right now.

Let's get to it.

1.1086 is my break-even.

I must lose 1000 dollars on this.

That is 200 dollars per contract, 16 ticks per contract.

Amazingly, with this loss, I could have easily exited on Friday morning.

I suck.

Let's do it.

Let's exit at an average price of 1.1070.

I will place them scattered, so it will be:
1.1050
1.1060
1.1070
1.1080
1.1090

Done.

So be it.

Losing 1000 dollars from, hopefully, my last martingale trade.

Hopefully it won't still blow out my account despite this "sacrifice" of 1000 dollars.

There you go, once again, I went, in one post, from a target of 14000 to a target of -1000. Pretty unstable and inconsistent.
 
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what I learned about my discretionary problems

After this last experience and the related thinking, I have written myself a .txt reminder of everything that so far I've learned about my discretionary trading.

As explained in post 2674 and in the immediately preceding ones, my trading can be divided in three types:

1) automated, that works and produces 1/3 of profit
2) discretionary with stoplosses or stoplosslessness in GBL and similar markets, and it produces 1/3 of profit
3) martingale, compulsive, no stoploss in bottomless markets (such as JPY), which also produces 1/3 of profit, until one day it blows out my account

Number #3 has to be eliminated, and it can be due to a list of reasons:

1) boredom
2) frustration
3) subconscious desire to be a failure to spite my father
4) guilt for making money without working (a sin for my catholic parents)
5) lack of clarity on a defined profitable method
6) hyper-sensitivity to losses that I avoid by postponing exits
7) inability to follow rules, after a childhood of strict prohibitions by my father
8) too proud and neat to accept trading losses that offend me and disrupt my planned order of things

What seems the best cure is as follows:

1) stay away, like "the scorpion and the frog" explains, from situations where your instincts are tempted (like when you're in front of a TWS). Such as not buying a cake and putting it in the refrigerator if you're trying to not eat cakes.

2) Train your ability to accept defeats and unpleasant situations in your daily life. Too much perfectionism, intolerance, and lack of annoyances makes you unfit for trading, where there's chaos and unpleasant surprises that you can't fight but have to accept.
 
Ok, so here's my present state of mind and expectations.

Monday, I expect JPY to bounce to at least allow my 5 exits, scattered from 0.011050 till 0.011090.

Why did I scatter them? No particular math formula. I have the instinct of fearing that they won't be taken by 1 tick, so instead of placing all 5 at 0.011070... I scattered them.

I don't know if it makes any difference in terms of math. If it doesn't, I am an idiot, and actually it might even hurt because those above 0.011070 might not be executed as a consequence of this spreading.

It seems right though, so I can only do what seems right.

Given that with a break-even exit, my account would have been at 23k, if these exits go through, I will have a capital of 22k, which is still awesome, if I think of all I've been through in the past 48 hours due to the JPY trade.

If I can also finally learn to not do reckless trades, and risk the entire account to avoid a 200 dollars loss, then that 1000 dollars loss will be really worth it.

Besides, my systems could not trade on Friday, because of that ongoing JPY trade, and this lack of margin, preserved me from a further 1000 dollars loss by the systems.

So i'd exit this trade without any difference for my account, because I'd lose from JPY what the systems would have lost.

So. I'd be happy. Happy with my 22k. And, how hard is it really for this guy to reach my target?

I don't know. It might not happen.

...

Fine.

I am going to let go of another 375 dollars and set my last 3 contracts with exits all at 70.
 
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compulsive perfectionism is incompatible with discretionary trading

After more thinking in the bath tub, I just realized once more and more clearly than ever that I'm the victim of my own perfectionism and success in eliminating annoyances.

I've successfully eliminated all annoyances from my life: malfunctioning bath tub, malfunctioning shower, boring friends, noisy neighbors, fat foods, extra pounds, hair loss, cavities, annoying colleagues who touch me, I've eliminated every single annoyance in my life, including I can sleep, I have a perfect weight... no need to keep listing all the problems I've solved.

And then, like Hitler, or like I do sometimes when playing risk, I've then gone on a... hubristic rampage, actually ever since the start of trading, to also eliminate losses from trading.

My perfectionism has caused me countless crashes like Icarus who dared too much flying too high and close to the sun (ancient tale, totally ignorant, I know).

I dared too much, and got too used to being able to eliminate annoyances.

In trading it cannot be done. I don't have the ability to do arbitrage or high frequency trading, so I better get used to taking losses, or it's all over for me.

...whether or not the gods of the markets will forgive me for my latest martingale madness, which is puzzling me nonstop. Just ten more hours till the open of the markets.

I need to learn to withstand the frustration of being annoyed. I need to be ok with a given amount of daily annoyances, whether from people, or from things.

I need to learn to be easygoing and serene in the face of adversity.

Georg Friedrich Haendel - Sarabande

That's it. I am going to go out, looking for trouble, looking for adversity and learning to be serene and... easygoing in the face of adversity.

And clearly I didn't say I will get into a fight or in a duel like Barry Lyndon. I have to learn to use the stoploss with a smile in life as in trading. So, in life as in trading:

1) enter a promising situation/trade (not in the case of walking, because that is neutral and boring, but let's pretend there's something to gain from walking downtown)

2) find out that it is not a positive situation/trade

3) do not be upset by it and exit it as conveniently as possible

In life the solution for me has been to avoid most situations, so to avoid losses. But i have to revert to normalcy, because this method is misleading and cannot be applied to trading, so I have to gain/develop my ability to deal with losses / disappointments / annoyances. And I can only do this in real life, because in trading it is too costly.

So, once again, let's go out, look for trouble, and see how to train myself to not mind trouble and get out of it by minimizing damage.

Get in trouble, don't mind it, get out of trouble.
 
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Re: what I learned about my discretionary problems

travis said:
1) automated, that works and produces 1/3 of profit
2) discretionary with stoplosses or stoplosslessness in GBL and similar markets, and it produces 1/3 of profit
3) martingale, compulsive, no stoploss in bottomless markets (such as JPY), which also produces 1/3 of profit, until one day it blows out my account

Number #3 has to be eliminated, and it can be due to a list of reasons:

1) boredom
2) frustration
3) subconscious desire to be a failure to spite my father
4) guilt for making money without working (a sin for my catholic parents)
5) lack of clarity on a defined profitable method
6) hyper-sensitivity to losses that I avoid by postponing exits
7) inability to follow rules, after a childhood of strict prohibitions by my father
8) too proud and neat to accept trading losses that offend me and disrupt my planned order of things

What seems the best cure is as follows:

1) stay away, like "the scorpion and the frog" explains, from situations where your instincts are tempted (like when you're in front of a TWS). Such as not buying a cake and putting it in the refrigerator if you're trying to not eat cakes.

2) Train your ability to accept defeats and unpleasant situations in your daily life. Too much perfectionism, intolerance, and lack of annoyances makes you unfit for trading, where there's chaos and unpleasant surprises that you can't fight but have to accept.
Click to expand...

Condense that, print it off and stick it near your monitor.
Use post its stuck to your screen as well.
Also try entering the condensed text into a bitmap using MS paint.
Save the bitmap as "desktop message".
Then set it as your desktop background, in the centre.
I do that, its a helpful reminder for lots of things.
 
sleeping problem solved and lessons learned from solving it

Like I said to jazeonli, these things that worked with you guys, have not worked as well with me in the past. But, to not disappoint you, I placed a link on my desktop to the .txt file assessing my trading problem, and i've followed his advice as well. And I've already placed a reminder in windows scheduler that pops up and tells me, every hour, "THINK before compulsive behaviors".

However, these are just the last of a decade-long list of efforts and tricks, and none of them ever worked (big signs and reminders do not work with me). That is why I am trying a new approach.

As I explained in previous posts, for one thing I went out for two hours, in the middle of the crowded streets of rome, and looked for challenges, unpleasant experiences, annoyances, and practiced "not minding" them. Remember lawrence of arabia? What's the trick? Not minding that it hurts. Same with stopping losses: the trick is not minding that it hurts.

The Trick Is ... - YouTube

In the same way I have to learn to not mind annoyances. I have to get used to not minding inevitable annoyances rather than working obsessively and methodically to eliminate them, as I have been doing in my life. I must accept those that cannot be eliminated without being driven mad by them.

The other part of my cure, is, remember, to stay distant from the temptations, so I should not be in front of my computer, especially with the connection to the server, with TWS right in front of my eyes and the tickers updating.

Now another important issue: sleeping problem solved

Regarding all the possible explanations (8 of them so far) for my trading problem (not accepting losses), I must mention my sleeping problem, which I recently solved for good.

It was similar to my trading problem, because this is what they had in common: uncontrollable urges kept me from functioning in my best interest.

Waking up at night, not going back to sleep, not going to sleep, just in the same way as I placed random trades, added contracts to losing positions, didn't exit when incurring a loss.

Well, good news. The sleeping problem was solved.

And, while in the past the reasons for it were similar to those I found for trading, such as (I will list them side by side, with alleged reasons for insomnia in red):

1) boredom (potential cause for compulsive gambling), vs empty day that makes me unable to sleep because I feel I've done nothing
2) daily frustrations, vs daily frustrations that cause sleeplessness
3) desire to be a failure to spite my father, vs not wanting my day to be perfect as it'd be the case if I slept well
4) guilt for making money without working (a sin for my catholic parents) vs guilt for being rested and having a very easy life (taxi to work, fewer hours due to part-time schedule, and with sleeping, being well-rested)
5) lack of clarity on a defined profitable method vs... NOT APPLICABLE
6) hyper-sensitivity to losses that I avoid by postponing exits vs... NOT APPLICABLE
7) inability to follow rules, after a childhood of strict prohibitions by my father vs feeling that sleeping meant behaving like an obedient child and I am a rebel
8) too proud and neat to accept trading losses that offend me and disrupt my planned order of things vs countdown to getting up: the idea that I only had 8 more hours to sleep, then 7, then 6... I felt it kept me awake

Well, you know what? Now I sleep well, have been sleeping well for weeks, no bags under my eyes anymore, and how did I achieve all this? I went to sleep in the attic, where there are no neighbors.

YES!

And it turned out that almost all of these very appealing and seemingly perfect explanations were bull****, because now that I sleep well I don't give a **** about:
1) feeling guilty because I am rested and I take cabs to work and I leave 3 hours earlier than my colleagues... I do not give a flying **** about my colleagues. It sounded great an explanation, but it wasn't it.

2) I do not give a flying **** about my childhood and my father - it wasn't therefore the reason I could not sleep, regardless of how good it sounded

3) frustrations don't matter: I was able to sleep perfectly when I had those 5 overnight JPY contracts

4) not being tired and having had an empty day doesn't affect my ability to sleep either

5) the countdown don't bother me either. I don't give a **** if I only have 6 more hours before the alarm beeps, because even 6 hours of sleep without fearing for being woken by the child is good enough. Interesting finding.

To make a long story short, of all those beautiful explanations I had come up with, explanations that for years I fully believed (!), of all of them... all I probably needed to be sleeping was:

1) the certainty that no child would wake me up at 4 AM screaming.
2) staying away from the temptation of getting up and turning my laptop on (I don't bring the laptop to the attic)

I don't think that either one would have solved the problem by itself. I needed both.

So what I am saying is that it could very well be the same for my compulsive/martingale/stoploss problems. And therefore I might not have to solve 8 problems but maybe just one or two.

It sounds very good to blame it all on my father, on my catholic upbringing, but maybe it is just a matter of
1) putting distance between me and the cake (similar to solution #2 for the sleeping problem, cfr. fable of scorpion and frog)
2) something else or maybe just, as I said, developing some skill in accepting annoyances
 
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Judgment day for me in just 6 hours, when the markets open.

I need to learn some modesty.

I was hoping too much, and here I am.

Well.

If JPY wipes me out, it will teach me a lesson, so vivid, that I might never trade again.

If it doesn't wipe me out, it will also teach me to be modest, because a loss of 200 turned into a loss of 1500 (that's where my LMT orders are), because I wouldn't accept it.

Anyway, I won't find out until tomorrow, because I won't check at midnight but at 7 am, when I wake up and turn on the systems.

...

I officially suck.
 
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As the market opening time approaches, let me just say out loud once and for all that I will not complain if JPY goes much further than my LMT orders, because I don't want this reckless trade to be rewarded, and at the same time, I want to increase the probability that my exits will be executed.

... at the same time, I wish I knew the future, because I really think that JPY is going to to 1.13 - it reminds me of that scene in malcolm x where he's asked if it was loaded:

Denzel Washington - HEAD NIGGA IN CHARGE - YouTube

That part about where he put the bullet is not in the clip. But this is good:
http://www.subzin.com/search.php?title=Malcolm+X&imdb=104797&search_sort=Popularity&type=All&pag=24
00:54:36 Rudy, don't you ever...
00:54:38 ...try and cross someone who ain't afraid to die, you hear me?
Click to expand...

...Or I could leave all trades open, remove the exit LMT orders, and see where it goes in the next two days.

But, given that I have such easy trades to make, on GBL and others, is it really worth it to play russian roulette with the markets?

The wise thing to do at this point is to exit with a loss of 1500 dollars.

Of course if I was positive about 1.13... but I am not positive and I am not even almost positive.

Damn, I feel like engaging in magical thinking or flipping a coin.

I am so confused. I feel like the gods of the markets are telling me to get rid of the LMT exit orders and stay LONG for two days.

Do you know something... the gods of the markets whispering in my ear right now are the same ones who told me to stay long on GBP in the summer of 2008, when I blew out my account in one month of staying long on GBP.

But then again, could they be deceiving me twice?

Would they dare to deceive me twice in a row?

And then again, that was the beginning of GBP's fall, whereas this is the end of the JPY's fall.

I feel like being a hero, removing those exits and staying long for 2 days.

If JPY reaches 1.13 my life will definitely change.

00:54:36 Rudy, don't you ever...
00:54:38 ...try and cross someone who ain't afraid to die, you hear me?
Click to expand...

I have fear, but what am I afraid of?

You know? Maybe I am not afraid at all of blowing out my account.

My biggest fear right now is... feel like an idiot because I came out with a 1000 dollars loss when JPY bounced much more.

Am I going to be wise or am I going to be bold?

...

Eureka.

Instead of going back and forth between the two options endlessly, here's what I'll do.

JPY cannot fall much more.

But I will regret it if it goes down with 5 contracts that barely missed my LMT.

So I cannot carry those 5 contracts for much longer.

JPY can fall two hundred more ticks without bouncing back.

That is 5000 dollars if I keep 2 contracts open.

I'd still feel like an idiot, but not as much as if a margin call closed my contracts at the bottom.

So, I need to close 3 to not feel like an idiot in case it jumps a little and then falls more.

And i need to keep 2 open, to not feel like an idiot in case it bounces and keeps going up for 2 days, gaining 200 or 300 ticks.

So, I'll do this.

Close the first 3 contracts at:
1) 0.011040
2) 0.011050
3) 0.011060

By doing that, relative to the buy price, I will be losing 1000 dollars.

Then I will leave the 2 other contracts open for 2 days, waiting for the full extent of the bounce, whenever that happens.

If the bounce reaches 150 ticks, as I expect, I will be recovering the losses from the other 3 contracts, plus make an extra profit of 1000 more or less.

Then of course it could all go very wrong, and the JPY reach 1.0 and I'd blow out my account just with those two contracts.

But at least I am going from an uncertain situation to a very unlikely situation.

I don't have the balls to close all contracts, because I'd feel like an idiot in case of a rise.

I don't have the balls to leave all contracts open, because I'd feel like an idiot in case of quick bounce, a subsequent fall, and then getting a margin call.

3 hours to go.

The only thing I am wondering is if I should exit the fourth contract as well.

Ok, but much higher.

I'll exit the fourth contract at 0.011111

And I'll leave the other one open, closing it on Tuesday or whenever I see that the rise hesitates, starting on Tuesday.

This hellish experience could end with the account at 24k or it could end with the account wiped out.

But this is a mix of exit levels so I feel much better than if I set the exit for every contract at let's say 0.011111.

Ok, I am done with everything.

I'll go to sleep before I change my mind again.

Let's not forget tomorrow... let's not complain about what we did today because let's remember that today we did not know the future.
 
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Ok, i woke up, came to my email, to see if there was an email from IB talking about a margin call. There was an email about a margin warning, indeed, but not one about liquidation.

So I went and checked TWS, having avoided a heart attack, and I found my 5 contracts still open, and price was where I left it on Friday, showing me a loss of 5000.

It had touched a lower low, but didn't go much lower, just 8 ticks.

And it's been ranging there, within 50 ticks, for hours.

Of course now I'm going to leave it open and wait.

But there is one good news. JPY is the most positive of all currencies:

Snap1.jpg

This is definitely a good thing.

Now I'll go to the office, and when I come back, same routine: email, TWS, after a lot of praying.

...

Came back from shower, and the rise has started. This is a serious rise. A thoughtful rise after a night of thinking for the JPY. And I've already seen my loss go from 5000 to 3000, in half an hour.

I raised my LMT for all those contracts from 40, 50, 60 to 60, 70, 80. I lowered 111 to 90. And I am leaving the fifth contract open, until Tuesday.
 
Last edited:
travis said:
Came back from shower, and the rise has started. This is a serious rise. A thoughtful rise after a night of thinking for the JPY. And I've already seen my loss go from 5000 to 3000, in half an hour.
Click to expand...

Certainly does look much better, U.S. open will be interesting.
 
Oh god, don't tell me stuff like that.

I am not looking to avoid heart attacks.

Now I just checked my email to see if there are any margin notifications. None.

Now I'll look at the charts on esignal (I am at work).
 
travis said:
Oh god, don't tell me stuff like that.

I am not looking to avoid heart attacks.

Now I just checked my email to see if there are any margin notifications. None.

Now I'll look at the charts on esignal (I am at work).
Click to expand...

Sorry, I'm watching USDJPY, should have said :)
No panic.
 
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