my journal

[Yamato]

Like in all other areas of my life, in trading I've felt I was special, and that I could pick the exact turning points. My confidence, my arrogance allowed the markets to deceive me for 12 years, while I was in denial.

 

[Yamato]

Losing 180. Obviously not all of my signals are right. According to testing, only a little bit more than half of them are right, excluding the help I get from pivots.

Maybe I can get help from time zones as well in the future. I definitely know when the markets move and when they don't. I even know when markets move with the intraday trend and when against it.

22.00 CET is actually a moment when markets reverse, but then again what was today's trend? Slightly up.

 

[Yamato]

I'll go talk to my dad for a bit, to see if he can make the markets rise.

 

[Yamato]

The pretty good thing about this method is that if you lose 250 today and cannot trade anymore, tomorrow you'll be more careful in picking your trade. It's unlikely that you'll go on losing 250 dollars every day. With the other method I won almost every time, and when I lost one loss was higher than all previous gains put together. This deceives you into thinking you're good.

Anyway, the day is over and today I followed my system. I have not been a gambler. I think it's the first time in my life that I do this consciously, with the knowledge of having followed a method in every rule and having known what my biggest loss could exactly be.

 

[Yamato]

I am down 140 dollars and I don't know whether I should go to bed and wake up tomorrow to see if my trades went well or not. Either way, I won't have lost 250, so I'll be able to trade again tomorrow. Oh, and also if I did, that loss would count as yesterday's. But I didn't anyway.

Certainly I am not planning on tricking anyone nor me in case this trade turns out to be a loss, and I'll report it tomorrow morning. Ever since I kept this journal I have been even more truthful to myself because I had to be truthful to others. The journal has forced me to see the truth, because I was writing it down for others. It forced me to record the truth, and I was then able to go back and read what I was thinking and what I was doing, for example my gambling just a few days ago:
http://www.trade2win.com/boards/trading-journals/72598-my-journal-80.html#post984072

It forced me to be a better trader because I wanted to show a better trader to the readers, and since I can't lie, I had to become one. I was getting messages from people feeling sorry for me, and I felt bad for them. I was surprised that people could care about me, about my losses, even more than I did. I tried to become a better trader for them, more than for myself, because I didn't want them to feel sad for my situation.

 

[Yamato]

Now my position is 4 ticks away from the stoploss. I wonder if i'll stay up long enough to see price reverse and go up, or long enough to see my stoploss be triggered.

Today nothing went wrong because in all cases I followed my plan and didn't exceed the predetermined losses. It was a very good day in these terms.

But let's remember what Elder said, and what I know to be true: it's easy for an alcoholic to go without drinking for the first few days. I know because I stopped discretionary trading altogether and didn't make any such trades for a whole month, then I started again, uncontrollably, on the very day I was celebrating a month.

In two minutes more futures will open. This will most likely affect my future as well. So my stop will either go off, or prices will go the other way. Certainly they will not stay still within a range of 10 ticks.

10 seconds more...

 

[Yamato]

Going up in a big way... something happened. I hope it will last.

Certainly that won't make me think that my trade was a good one because it wasn't. Any trade with a bracket order of +20 and -20 that lasts for 3 hours is not a good trade.

 

[Yamato]

Now i am only losing 90 dollars. At the same time, I am losing precious hours of sleep, which tomorrow could cause me to be tired and lose money. But if I go to sleep while the trade is open, I might wake up with nightmares, so I might as well stay up a little bit longer. But if I was really rational, I'd just close the trade. And then I wouldn't have talked to my dad up to now, only to get more depressed.

 

[Yamato]

Ok. I have a feeling that I might get a lot of these 20 ticks trades right, and that I might teach some people to trade in the process of teaching myself not to gamble. Indeed. Because I do know enough about the markets to predict their direction with enough precision to make money, provided that I go with the trend. There you go again: since the trade has started to go well, all my depression is gone, and i am starting to get delusional again. Losing -2.50 now.

 

[Yamato]

Making 20 dollars now.



Now 60.

 

[Yamato]

After all, it might be as simple as following the trend and doing the same things I was doing before. What did I do wrong for 12 years? I tried to pick tops and bottoms, and therefore went against the existing trend. So I recently decided that simply by following moving averages, I would not allow myself to go against the trend, and therefore do the opposite of what I've been doing for 12 years. And that's what made me throw my famous "overstretched system" in the trash.

But that won't stop me from being able to identify overbought / oversold in the short term, the breathing of the market, which I have learned to read in all these years. So I can still use a lot of things... that I've learned to read. It's as if for 12 years I tried to get a tan in rainy days in winter, and all of a sudden moving averages are making me do the same thing during sunny days in summer. It's going to be a lot easier for me, especially with all the training. But once again I may be just fantasizing because my position is doing well.

+150 now

Mmh. That's good. My position got closed. So that's two good trades in one day, my first day as a non-gambler.



I certainly do not regret making this trade. And this is the proof that my father has no influence on the EUR. I don't know about the other markets.

What I was thinking was this, regarding that comparison about getting tan: it's as if for some wrong reason you are told that to walk best you have to carry ten kilos of weights attached to each of your shoes. Then you'll walk funny, but certainly, if you can... I don't know what I am talking about... bad comparisons... i am just very happy that everything went well.

Basically my point is that if you are told to shoot blindfolded and you keep on missing, and you even kill a few people by mistake, then one day they let you see and shoot, you're basically going to do very well. Yes, you wasted years and years, but you might have a better understanding of targets... once again bad example, but there's something right in all these examples.

What I mean is today these trades were quite easy for me. Just like for michelangelo who set the angel free from the stone by carving away what was unnecessary, I carved out all the bad habits and bad methods, after all these years of practice, and finally carved out enough to set profit free.

I saw the angel in the marble and carved until I set him free.

On the one hand, he makes it look easy, because it is simple but not easy. On the other hand, in another quote, he lets you understand how much work was put into his art:

If you knew how much work went into it, you wouldn't call it genius.

Same here. You keep on trying, sooner or later you'll get it right, whichever way you go about it. Even if you go in the wrong direction for 12 years.



-----

7.40 CET
SELF-DESTRUCTION IS...
Can't sleep. Woke after sleeping for less than 4 hours. I had turned off the alarm but I still woke up at 7.33 AM CET.

"Self-destruction" for me is the compulsiveness I've felt throughout my life and the things it makes me do, like an engine that overheats and then blows up: not sleep, over-trade, over-write, over-talk, over-everything. This compulsiveness comes from an anxiety to overperform that my dad passed on to me (by telling me everything he told me ever since I was born), and this anxiety to overdo everything decreases to an acceptable level only when I am on vacation (but even then I go for marathon swimming). That's why I've always felt that in order to live decently, I'd have to quit my job and be on a permanent vacation.

----

8.00 CET
NEW VERSION OF SYSTEM: SIMPLIFIED

Before answering wprins' post, here's another intuition I've had while sleeping about the system.

Why should I have two different charts with two different averages on different timeframes when I can have both averages on one chart? The 15-periods on the 15-minute charts is nothing but the 1-minute average 15*15=225-period average. This will give me one single very detailed chart on where price is with regards to moving averages, and one chart with pivots. It will save me a third chart needed to view the slow average with precision. So here's my new rules:

PRO-TREND DISCRETIONARY SYSTEM
HOTKEYS
Set up hotkeys: "B" for "buy 1 at market" with 20 ticks bracket order, "S" for "sell 1 at market" with 20 ticks bracket order, "C" for "close position".
----------------------
CHARTS
SET UP THESE EUR.USD@IDEALPRO CHARTS ON IB'S TWS:
2 DAYS OF 15-minutes CANDLES WITH PIVOTS
4 HOURS OF 1-MINUTE CANDLES WITH 15-periods and 225-periods moving averages
----------------------
discretionary ENTRIES can be made if:
1) you haven't lost over 250 dollars for the day (from discretionary trading)
2) the 225-period ma is in favor by at least 5 ticks
3) the 15-period ma gets crossed by price (in favor) after touching the other side >= 3 minutes
4) your entry and your take profit are >=10 ticks away from any pivot lines
EXITS
Bracket order of 20 ticks. You can exit early if you wish, but not increase the distance of the stoploss.

 

[wprins]

New reply, wahoo!

YOU'RE QUITE PATIENT
Well, your arguments are as good and patient as they could be, but I am sorry to say that they don't fully convince me.

Thanks, I'll take that as a compliment. To be honest, I'm not patient by nature (for that matter I don't think humans are naturally patient but I digress), but my day job (programming computers) has taught me a lot of patience I think. When a program I wrote doesn't work, it's basically only my fault, and then impatience tend to just prevent you from finding the fault. So, I've learnt the best state of mind to find a problem and move forward, is a patient, contemplative, focussed mindset and even then, one must sometimes walk away and come back later. Anyway, I digress again... As for not fully convincing you, that's ok!

SCHOOL SUCKS
[...] part of my prejudice [...]

I think you nailed it on the head here. I must say I think your prejudice here is counter-productive. While clearly educational systems have not treated you well, this nevertheless does not mean that all educational means and methods are worthless. It is simply not reasonable for every individual on this planet to rediscover every piece of knowledge about every subject for themselves. In any event, I have sympathy for your position and in any case, I also share your preference for active/successful traders are mentor's/coaches.

Actually I want to make something clear at this point. There was basically 2 issues at stake in my previous response to you: 1) A matter of principle, and 2) What one does in practice/ a matter of pragmatism.
1.)My arguments about NLP and trying to argue that being a good coach does not ipso facto require being a star trader is a matter of principle: You should always have an open mind and consider what someone presents to you on it's own merit. To do otherwise would possibly unnecessarily disadvantage oneself from a potential learning opportunty.
2.)As a matter of practice however I (like you) would highly prefer a real trader as a mentor/coach. For people not in the first instances traders, I would again prefer people who either nevertheless also trade, and who clearly has also made it their mission (and has the necessary skills) to research (e.g. using NLP for example) successful traders.

YOU EITHER MAKE A LOT OR LOSE A LOT
"...Returning about 4% per month is likely a far more reasonable (eventual) target...". Not to say that you don't make sense, because everything you say is reasonable and understandable, but personally I would be thinking more black and white, as usual. If you trade futures, you can make 100% a month, whether with systems or with discretionary trading, so if you don't make it there's still something wrong in your trading. Most likely if you don't make at least 50% a month with futures it's because there's something wrong (like in my case), and then that means you'll blow out your account or not trade, but in no case you're likely to get stuck at making 4% a month with futures. You either make a lot or lose a lot. It's unlikely that you'll make 4% a month consistently.

I didn't mean to imply that you make 4% (or any arbitrary percentage) consistenly every month, it was meant to give some idea of a reasonable/modest return/goal on average over a substantial period of time. So after a year, if you total up your gain I suggest that something like 4% per month on average (before compounding) would be a reasonable low-risk target with a high probability of continued survival.

Also, I'm fully aware of the fact that in principle it's possible to make 100% (or more) a month using leverage (you can do this in spot FX as well) but my view has become that this is not sustainable and not safe. I've in the past (primarily on demo) managed to return like 400% one month, and a 100% another. The trouble is though, that this rate of return is generally speaking NOT sustainable or safe and sooner or later you get similarly hammered to the downside.

My apologies if this perception is incorrect and you know all this, but I get the feeling you don't fully realise the effects of risk and leverage on your trading. Let me explain and then you can tell me if you already know this and I'm off base.

1.) Your first job as trader is risk manager. If you don't look after the risk, any profits you make *will* eventually be lost!

2.) This means your first responsibility is that you need to trade in such a way that you are able to survive and be here to trade again another day and not only that, but be profitable again soon after a setback.

3.) Fact: At some point you *will* have a surprising/unexpected/unlikely run of losses (say 10 in a row), no matter how good on average/in general your system is. You need to account for this as something that *will* happen sooner or later and that you must be able to survive. This means your system/trading system/trading style will need to be able to bounce back from such an event. It means you system must basically never be able to get into a position that your loss is so great that your system cannot return itself to overall profitability in a short space of time.

4.) Fact: Recovering from such a "maximal negative excursion event" is harder the bigger the absolute % of loss in account equity is. You must therefore limit this maximal % loss/drawdown level to one from which recovery is easy. To wit:

% lost % gain needed to recover
1.00% 1.01%
2.00% 2.04%
5.00% 5.26%
10.00% 11.11%
15.00% 17.65%
20.00% 25.00%
30.00% 42.86%
40.00% 66.67%
50.00% 100.00%
60.00% 150.00%
75.00% 300.00%
87.50% 700.00%
90.00% 900.00%

5.) Obviously, the larger the loss, the harder it becomes to recover. Lose 50% of your account and you have to make 100% just to get back where you were! Lose 75% and you need to make 300% to recover! If you have 3 trades and each loses 50% of your account, you'll be left with 12.5% and will need to make nearly 700% to recover, and that's only 3 consecutive losses of 50%!

6.) On the other hand, if your worst case likely/expected loss can be limited to (say) 10%, then you only need 11.1% to recover, which is much easier than 100% needed if you lose 50%!

6.) The above then implies limits are needed on the size of your allowable losses. If your worst case expected series of consecutive losses are, say 10, and you want to limit such a run to, say, 10% of account equity, then it follows that you need to ensure that your trades sizes/stops are such that 10 successive trade losses will not exceed 10% of account equity. It follows that no single trade may risk loss of more than about 1% of account equity, for example. This is the only way you can ensure you'll be able to be in this game for the long haul and not blow up sooner or later!

5.) Now in reality, the actual maximal number of expected consecutive losses will vary based on trading system/strategy and market you trade. You will consequently have to do research to find out what the maximal number of consecutive losses actually seen for your trading strategy is in various markets to help you arrive a realistic estimate on this value for your trading system.

6.) Obviously the more margin you use/the larger your trade size, the closer your stops will have to be to comply with your % trade size limits determined above. But.... the closer you place your stops, the more likely it becomes that you will get stopped out due to market noise, so suddenly the win/loss rate of your system is affected and the maximal number of expected consecutive losses becomes bigger! This demonstrates that picking an arbitrary position size and then using allowable percentage loss per trade to place the stop is ass-backwards. You have to rather place your stops properly, based on your system, and such placement should **not** be affected by how much you're risking on the trade. Otherwise as explained, your risk management is going to interfere with your system's edge.

7.) So, the above 2 points them unavoidably implies that there's a limit to the the size of position you can **safely** trade. And that you need to determine position size based on your stop level, and not the other way round! In essence, you need to determine your stop position based on market realities/your system only (e.g. lower/higher than major recent swingpoint or whatnot) and *then* *only* determine position size to comply with both the stop level and maximum % risk per trade allowed.

8.) The above means you will only lose a predefined amount of account equity if you lose, and that this will only happen if the premise for the trade is proved false by an unexpected adverse market move, and not due to market noise hitting your stop due to it being too close for example. It means you will probably be able to survive and bounce back even from long losing streaks. It does however mean that you won't likely make massive amounts on single trades or (in practice) 100% per month or such and even if you do once or twice it's likely not sustainable, as such returns typically implies the type of position sizes and risk levels which would cause a blowout if even a modest losing streak is encountered.

Bottom line is, the numbers don't lie, so I'm a bit sceptical of very high return rates, because generally speaking they are hard to maintain and sustain for reasons I tried to explain above.

And the help the profitable trader will charge you for (he may still be ripping you off) is readily available for free on elitetrader.com and other forums crowded with profitable traders.

It is true that a lot of trading knowledge is available for free and I also highly prefer to get information for free if possible.

However, the trouble is it is also true that one can spend years and years trying to find and piece together all this free information and then learn from it, and effectively waste **a lot** of time in the process.

I hence argue and submit to you there comes a point where the time saved by reading a well written book where a lot of useful information has been put into one place, or paying someone else to help you is rather more valuable than the money you lose buying the book or getting the mentorship. Time is the one non-renewable resource we all have. When it's gone, it's gone. Your time should really be your most precious commodity. Therefore, if you can safe a lot of time by spending a little money, that is often money well spent.

To illustrate by example: It would for example be crazy for me to refuse to pay a doctor to prescribe me anti-biotics if I have an infection, on the basis that I have the capacity to discover this cure for myself (for free) and (in principle) produce it for myself for free.

Such an undertaking may take me years if not decades and for what? To reinvent what someone else has already done? No, the wise person will spend the few pounds and get a prescription from a doctor, and then spend some money to get the medicine. The cost/benefit ratio is out of this world! Your few pounds in effect buys the combined work and experience of doctors and scientists over many years and saves several decades of struggle of your own life, and furthermore costs you only only a few hours of your life and a few pounds in money terms.

I am sorry but in my opinion the automated trading section of that forum is the best there is on the web, so I'm having to advertise it repeatedly.

Actually I'll have a look, I've never looked at elitetrader too closely, though I've looked at many others (ForexMoments, ForexFactory, both good ones.)

You quoted Einstein saying to keep things as simple as possible but not simpler. Well, those guys writing books aren't doing it. All knowledge necessary for profitability can be kept within one short post.

That's your opinion. Unless and until you're actually profitable, you can't very well make claims about whether book authors (many of who are in fact profitable) can actually make their books any simpler than they already are.

I also want to just add that, for the purposes of learning, sometimes repetition is a very good thing. You may find it irritating, but generally speaking repetition is a good thing for learning, and as they say, patience is a virtue...

"there are in fact some which are genuine": for the benefit of readers could you list some names? Would you agree that the fx500club is one of the genuine ones? Not that I would enroll in their course anyway, because I've realized that I actually enjoy learning on my own, without being told everything by someone else.

I know nothing about fx500club. I'll have a look at it. Pragmatically speaking, I am only slightly less suspicious than you of commercial trading rooms and forums, and book authors. I generally always try to do as much due diligence to find out whether a book author or alleged trader is worth their salt or not, and I also prefer free over not-free.

I'm a bit loathe to list what I consider to appear to be reasonable commerical trading authors and mentors, since in I've not yet actually tried any of the commerical offerings myself. Perhaps the best to say is:
1)Dirk Du Toit and Day Forex Capital, here: http://www.dayforex.com/df_home.asp?boxlist=forextraining.htm
His e-book “Bird watching in Lion country” recounts his own history and take on forex trading. I've bought the e-book and am about halfway through reading it. I suspect you'll find it a bit wordy but it's interesting nonetheless. The other trader I told you about managed to win a trading competition after being mentored by Dirk. He's took profits out of his account recently after doubling it in a year, and restarted with $5000 AUD on 03/11. Currently back up by about 64% in one month which is excellent. See here: http://www2.oanda.com/cgi-bin/msgboard/ultimatebb.cgi?ubb=get_topic;f=16;t=011850;p=13#000184
(Perhaps my 4% estimate is a bit conservative after all )

2)“Winners edge trading” : http://www.winnersedgetrading.com/
For the longest time this was totally free, however I see Casey Stubbs and 2 or 3 other traders have now launched a premium mentorship offering for a nominal amount per month. As I've not tried it I don't really have an opinion about it except to say that I generally have a favourable impression.

3)“Hard right edge”: http://www.hardrightedge.com/default.htm A great amount of very relevant and useful free stuff as well as a web based course + mentoring offer at not a lot of money ($189 - $249 depending on how long you join) as well as other packaged courses/books. http://www.hardrightedge.com/tw.htm

4)“Informed Trades”: http://www.informedtrades.com/f111/ Another great free site with huge amounts of resources. Read the “Why do you do it...?” question here: http://www.informedtrades.com/26958-why-do-you-do.html
You'll probably like the answers

5)Book authors: Brian Shannon, Alexander Elder, Van K. Tharp, Michael W. Covel, various others.

To anyone reading the above, please be very clear: My mentioning the sites above is not an endorsement or encouragement from me spend money with any of them. I am not affiliated with any of them in any way so please don't just go by my suggestion but do your own homework as well if you are considering spending money with them.

you might have a point, but when someone is developing his own independent thinking, understanding and ideas he has to go by his own beliefs and cherish them, carve them in stone - he can't just be open to whatever everyone else tells him around him.

On the contrary, you can be open to what people tell you and have independent thinking without necessarily accepting what they say. In fact this is exactly what you seem to be doing here, except you're not equally open with ideas written down in books.

My beliefs is that in general what's popular is crap. Like madonna, and all the other rockstars and movies... all the popular ones are crap, so I always go by the assumption that by avoiding what's popular I generally do things efficiently. So if the crowd buys elder books I tend to spit on that, even without knowing anything about elder. And this guy seems to be quite popular, so I was assuming he's worthless. I may be wrong about this elder guy (but reading him won't change my life), but in general it is a good principle to follow: stay away from the crowd.

Here comes that principle vs. practice thing again – In general crowd culture is going to often be wrong, but in practice sometimes the crowds will get it right whether through luck or not. Assuming that anything that is popular is by definition wrong is oversimplistic and bound to be wrong at least some of the time at which time you'll be the pigheaded one for being too prejudiced to evaluate the issue in question on it's own merit and regardless what crowds might say about it.

On the other hand, if the crowd of people on this forum is all formed by smart people like you, weighbridge and gladiatorx, then this principle doesn't apply and I am doing things all wrong. But I am ready to accept your advice. But don't tell me to read a whole book unless you promise me that book will make me a millionaire.

No book will make you a millionaire. Only you can make you a millionaire... (but some books have the potential to help accelerate that process.)

I can read maybe one chapter. Books do not change your life. Unless it's a book on building explosives and so on. You get my point. Elder is into the psycho-babble. That's the worst part of trading coaches. Tell me about a book that recommends a system because statistically works, and then I might even read that. Don't tell me about non-quantifiable help from elder.

Have you actually read Elder's book “Come into my trading room?” It's hardly psycho-babble I think. (Edit: I see you've read some of it since you wrote the above. I think your copy is old hence bad language and such -- my hardback is dated 2002 and is well written generally.) It covers most areas of trading that most newbies won't know about: The differences between investing, trading, gambling (and why it matters), the different markets you can trade, suggestions for necessary gear, key elements of successful trading (so called 3 m's) e.g. “mind” (discipline, self destructiveness and so on), method (technical analysis concepts, trading concepts and methods including system testing, various different approaches and market selection criteria), money management, etc. Someone new to trading can do worse than read this book and follow it's suggestions. They'll certainly save many years of trying to figure it out on their own. It is possible that it may not be all that useful to you anymore (although some of the psychology bits about discipline and so on probably might be relevant.)

WHAT IS INTERESTING IS NOT ALWAYS USEFUL
You have to be calm... you have to breathe so and so... I've read enough of this stuff. Tell me what moving averages you have to use, what things work. Tell about a book that lists important data.

This sounds very beginner like to be honest. “Just give me the magic numbers, I want to start making money now!” It doesn't work like that.... there is no magic numbers that always works.

Even Jesse Livermore didn't teach me anything, even though it was a fascinating book, but I wouldn't recommend it to anyone who wants to read a book that will help him trade better. And that's one of the few books I've read on trading.

Did he really not teach you anything at all? I find that hard to believe. I think you might've learnt something from his book even if you don't think so.

You sound very wise, reasonable and knowledgeable and I can't argue against your elaborate, and detailed arguments any more, at least when they make sense. You know much more stuff about this business than me and show patience in listening to my reasons and replying to me. You don't deserve all my counter-arguments.

You flatter me – you certainly have the edge on me in terms of time spent trying to succeed. As for your counter arguments, don't worry about it, it's all good. I can take care of myself.

You could be right. I'll think about what you said. I was used to people writing me "you're a fool, what the hell are you talking about". I wasn't used to such good replies to my objections. Thanks for taking the time to explain so clearly your point of view.

No problem. I couldn't ask for more than for you to think about what I've said. Also to note again, I could also (and am no doubt) also wrong about many things. But, I do try very hard to always be as objective as possible and try not make ungrounded statements or hold too strongly to points of view that are just idle opinions. On the other hand this means that I can become quite opinionated about things once I've looked into something somewhat. I suspect we're pretty similar in that regard.

INTERESTING THINGS MAKE YOU WASTE YOUR TIME
Books are free, but what is precious is my time. What's precious is my basic knowledge and even ignorance that has to be kept like this. My mind has to be free from all the jargon and trash they want to fill it with. I studied charts before I knew there was a thing called "technical analysis". I knew that it was the way to go. Nobody told me.

I notice a slight paradox here – I've also mentioned the issue that time is valuable. Now from where I sit, books have the potential to save you time and by contrast wanting to do/learn everything yourself is then a supreme form of “wasting time”, since it's clearly impractical for anyone to rediscover and invent every piece of human (or for that matter trading) knowledge anew in their lifetime. Books then are a major time-saver, it allows humanity to leverage other's experiences and knowledge in a far shorter period of time than had everyone had to rediscover everything by themselves...

Reading a book would not only make me waste a month in my life, while entertaining me. It would make me go in the wrong direction. It would put a bias in my head, in favor of the author's ideas,

Not if you were reading several books and forming your own view about all of them... (Also, this sounds like "I don't want to spend a month of my life reading a book, but rather waste a year doing it mysefl!" Is that really better?)

[...] or against the author's ideas, because i tend to go against what I am told to do. [...]

Ok but that there then is the real problem, and it's your problem that you can fix... it's hardly the book's fault!

[...] So in case the author is right, he would make me go the wrong way. [...]

Well I would say that really it's you that would make yourself go the wrong way. But the right way is just a choice away!

I had a father who was trying to force me to do everything his way, and this really screwed up my mind, and made me a rebel forever. That asshole.

Nothing is forever, and clearly his efforts haven't totally screwed you up – you're a pretty intelligent and reasonable guy, even if you have some rebel tendencies. Some people/some people's lives are waaaay more screwed up than you'll ever be... there's a lot to be thankful for really.

If I can however be a bit blunt – you really need to make a decision that you're going to stop being the victim here. Whatever wrong and bad things happened in your life was wrong and bad, but now you have a choice to make. You can keep blaming your father and your circumstances and the teachers and schools and universities and however else and keep living in the past, holding on to all these feelings of resentment and being hard done by whowever; Or you can decide to let them and all the bad experiences go. Forgive them all, forget it all. Be free of them and move forward. You're your own person today. The past is gone. Cut yourself loose from it, and stretch yourself out towards the future. I'm not saying it will be easy and it may not be entirely painless, but honestly, you're the only one suffering from all this history, and for what?

YOU LIKE READING? SUMMARIZE WHAT YOU READ
"Brian Shannon": good to know. But how did his book change your trading career? What's the great advice he gave you?

Well, I suspect you might get different things from the book than I did. It helped me understand equity markets and their movements in a way which I only had a vague grasp about before. It introduced me to a concept/measure I hadn't previously come across (VWAP, perhaps you already know about this.) It showed me different ways to use MA's (not as signal generators) and actually gave me a whole lot of new ideas and understanding about supoprt and resistance levels, why they happen, how they happen and how to identify them. How to use multiple timeframes to your advantage. These few points off the top of my head. This summary will necessarily seem over simplistic. (Can't usefully summarise a book into 10 lines!)

It's funny but as I am reading your replies to my reply, I am starting to think by how you quote me that after all I might have made some sense to you, and that you might stop reading books altogether. Value your own thinking. Despise other people's thinking. Your own logical thinking is precious, and reading other people's thinking conflicts with preserving it. Trust me: reading books is a waste of time.

I think you do me a disservice if you think I don't value my own thinking or that you don't make sense to me. You do make sense, but I just don't always agree.

Furthermore, I don't think that your comments about my thinking and other people's thinking is an either/or question. I can value my own thinking while also valueing and considering other people's thinking. From experience I simply cannot agree that reading books is a waste of time. Some books perhaps yes. (But that's just par for the course, life's not perfect.)

"By critically evaluating what is written"... look if you really insist on telling me to open up, I'll tell you what compromise we could reach. I enroll in a chat like fx500club.com and we see what comes out of that. That's opening up and i think it could be useful to me, very much. That's a good risk reward ratio, and I am opening up to others. Books are not a good and efficient way to open up, because I am telling you: this guy was told by the publisher he had to fill up 140 pages or the book wouldn't get published, and any serious profitable trader will refuse to write in 140 pages what can be told in one page at the most. But even more than this: the profitable trader will refuse to tell you his method.

I don't think that it's as simple as that – when publishing a book it's not always in the publisher or author's interest to bulk up the book. This makes the book more expensive and may make the book less competitive and less profitable both to the publisher and the author. There are many books that are less than (even) 140 pages. However, many books are simply thick because they actually contain a lot of information.

I'd rather you didn't just rush off and joined the first/best forum or mentoring provider out there. If you're going to do that, try to find someone with suitable street cred.

"Suck it and see" is what I'm trying to get you to do...": yes, and i thank you for that. And if you are trying to help me, I'll ask help from you: summarize it and i'll suck it. Don't make me read the whole book. Summarize it for me.

Part of the learning process from books or otherwise is (re)producing your own summaries and so on. There is no possible summary I could make that would magically transfer all the knowledge in a good book into your brain. Unfortunately, as much as you don't have the patience for this, the truth is you need to do this work yourself. Also if I may say so, it's just tiny bit cheeky to expect me, a stranger on a forum, to summarise a book for you because you don't feel like it. In fact, I'd much like it to discuss book contents with other interested traders. (I've been forever nagging another guy at work who's also interested in trading but I can just never get him to actually read the book so we can talk about it and or implement some of the idea co-operatively.)

You and the other patient readers of this journal have been of great help already.

No problem. I'm glad the conversation is helpful. Now once again I have to go sleep. (That's taken far longer than I'd thought it would!)

 

[Yamato]

I've read your post (if we put our replies together, you've succeeded in making me read a whole book). Thanks for the infinite patience you've had in replying in detail to all the things I said, even taking time away from sleeping. I will reply shortly, because I don't have enough energy (nor things to say), even though you would deserve a longer reply. However, maybe we should try to keep our replies shorter for our health (so we both can sleep at night), because doing things perfectly on a forum (replying to a post, point by point) could hurt us in other areas, like not being able to sleep enough. Reasoning and arguing is important, but also sleeping is important.

What I will shortly say (you wouldn't want to spend another two hours replying to my reply anyway) is this: in my opinion, you're overestimating the usefulness of books, and not realizing how obsolete they have become in the age of internet. Books are way surpassed, their time is over. You don't read a book: you skim through a .pdf, using the search function to find what you need. You use wikipedia, youtube, you chat... books used to be the only tool people had to communicate things to distant people. Nowadays they're surpassed by much better instruments. Text and writing is useful as before, but since you can skim and search, you should do it: reading an entire book is not an efficient way to learn. It used to be necessary because books were written on paper. Not anymore and it should be avoided when possible, except of course when you are reading a novel for pleasure, but I am against that as well.

In my opinion, also, you're underestimating the power of my reasoning (not everyone's reasoning, just mine, because I am an intelligent person, not the case with the majority of people, who can keep on being told what to think by other people, and be sheep). Yes, by doing all by myself I risk reinventing the wheel and other things that are already explained in some book, but first of all I don't know which book that is, and second of all I don't where that book talks about what I need to know right now (for doing that reasearch, internet is much faster and more efficient, and that is what I do: and that is why browsing on the internet is superior to reading books). And third of all there's only a limited number of inventions that I need to make in order to become profitable at trading (please don't tell me the usual "but admittedly you suck at trading", because you'd be neglecting the automated systems that I've built). And I will be done faster with them by inventing them myself, or browsing the web, than by reading books. Yes, I've been an unprofitable discretionary trader for 12 years so far (but a profitable automated trader, and I haven't read a single book - except 2 excel manuals - to build those systems), but reading van tharp and all the other psycho-babble would not have sped up my process (as far as my discretionary trading).

The more you write, the more stupid you get, because when you teach you don't learn (you know it's true). That's why we should keep our posts short. And academics spend their whole life teaching and writing, and that's how they write books like "A Random Walk Down Wall Street", that are widely acclaimed, brilliant and wrong.

 

[Yamato]

The capital has increased to almost 7k by now, and today some of my systems will be trading because some of them have drawdowns low enough to trade with such small capital (I've lowered the requirements as well).

Despite the fact that I am dead tired, I want to place one discretionary trade according to my system, also because after yesterday's two good trades (one good and one lucky), I might have one or two readers who'll come back and check if today I'll make it happen again.

After the first trade, I felt lucky and very tired. After making the second, and during, despite the fact it lasted much longer, I felt less stress, and once if ended, even though I was actually luckier than for the first one, I felt like I was good. I felt that my method was actually good, because, with such a bad timing (right before the close, when usually price reverses or stalls), it actually produced profit.

Returning to my talk about capital again, since today is only Tuesday and I have 4 days to go, I wouldn't be surprised at all if I were able to get back to 10k by Friday night. That would be an amazing thing for me, because just a few days ago I was at less than 5k and with this state of mind:

http://www.trade2win.com/boards/trading-journals/72598-my-journal-81.html#post984130

Oh god... I was right on everything, and I lost 2000 dollars just because I kept staring at the screen for 15 hours... oh man... do i suck or what?

Closing my CL positions in 2 minutes with a staggering loss of 2000 dollars.

The famous 2000 dollars I told you about. All my discretionary gains of one month wiped out in 2 hours, on a trade made at the last minute, with no planning whatsoever, and doubling up when I saw I was losing.

Now 4 contracts on the EUR, to try and recoup my 2000 dollars loss. Do I suck or what...

 

[Yamato]

I am home. Let's see the situation today, with the new chart setup, to allow everything to be contained within one chart.

Price is within pivot lines 1.5071 to 1.5137



discretionary ENTRIES can be made if:
1) you haven't lost over 250 dollars for the day (from discretionary trading)
2) the 225-period ma is in favor by at least 5 ticks: LONG
3) the 15-period ma gets crossed by price (in favor) after touching the other side >= 3 minutes
4) your entry and your take profit are >=10 ticks away from any pivot lines: price at 1.5092 and I couldn't go short from here, but the trend is long

Now I just want to look at correlated markets and probably I'll go long at the next bullish crossover.

Analysis of correlated markets:
GBP too overbought.
ES is starting to come down.
CL is starting to come down.

Not good. Especially the fact that the GBP is so overbought.

Everything has been rising all day, but then again, 10 hours is not long for a rise.

Plus today it's a tuesday. I'd feel better if the trend turned around and I went short within the system, following all the requirements of short signals. But the really really big thing is the GBP being so oversold.

The gambler in me is looking for attention. He's screaming that he wants to go short on the GBP with everything he's got, with all margin available. But guess what.

I am not going to do it, and only because you guys are here reading me. Only in case anyone still cared. I am not going to go short on the GBP, even though it looks like an awesome opportunity, because:

1) I don't have any such trading plan ever written (i threw "overstretched" in the trash and for a reason), so it'd be an improvised unplanned impulse trade, and that has been bad in all past 12 years for me: no doubt about it

2) I would not have any clear stoploss in place either, and that would be even worse. I know for sure that if the GBP didn't start falling now, I would not only keep my short open but try to sell the house in order to open more short positions.

So my no is final, and hopefully my resolve will last. After all it's only my second day of non-gambling.

So, everything looks short, a short on the GBP looks awesome, but for the two above reasons, I won't make any such trade. I will only make any trades allowed by my system, and therefore only trades on the EUR (because its pivots are the only ones I found to be reliable).

 

[Yamato]

Yep, it happened - it had to happen sooner or later. I missed a good signal because I was busy writing, and the markets that seemed to be coming down instead resumed their rise. That sucks. But at least I didn't lose any money on the short trade the gambler wanted to start.



Tell you what. From now on, no more analysis... but wait I need the analysis, to stay away from rushing into bad trades. So forget it: I'll keep spending all this time posting charts and opinions in order to slow myself down from acting.


CHART FOR CORRELATED MARKETS: THE DISCRETIONARY PART OF THE SYSTEM
The lesson I learned from this missed signal (pretty good because usually the sentence started "the lesson I learned from losing 2000 dollars..."), is that I need a chart already set up to be looking at all correlated markets simultaneously (BOND, ES, CL, GBP).

Nope, forget the GBL and ZN.

Just those three: ES, CL, GBP. Yes, this looks good, set up for two weeks:



I don't need to write down new rules because looking at correlated markets is all part of my discretionality and so I can't regulate that part or I'll restricting my thinking and missing ideas.

This is just perfect because the GBP color for me has always been blue, and it is blue on this chart. Purple is obviously the ES. And so the other one is CL. It's all set up.

READY TO HAVE BOTH ACTION AND CONTROL
Now I can have both action and control of my action. Before I was either out of action (with only automated systems running) or out of control (with discretionary trading). I am both in control and acting, just the way I like, even though with the necessary restrictions. I hope I'll remember how good this is.

 

[Yamato]

It'll now be hours before I'll get another opportunity to make a trade. But next time something like this happens, my charts will all be ready. Now, since I've decided that it is best for me to continue reporting about my trades on this journal, I will define a standard way of reporting, to be clear, and to do it faster, but without skipping any steps, which could ultimately allow me to skip requirements.


TRADE REPORTS OUTLINE
Let's now plan a standard method of reporting on my trades so I won't be posting several times the same things and be slowed down more than necessary in my trading.

As I said, with the bracket order, I'll just report entry price, because the rest is all clear by the system. I will want to go step by step through the requirements of the system, by coloring them in red when not fulfilled (forget the blue for the fulfilled ones). I will only post one chart after my entry, because that's the part that takes most time.

So, there'll be 3 types of posts (the post will be titled accordingly via "Go Advanced" mode):
1) Pre-entry
2) Post-entry
3) Post-exit

1) Pre-entry (speedy writing, can write several of them)
No charts (for speed). Posting system's rules and coloring in red the requirements not met.

2) Post-entry (longer processing, just one post)
Posting entry price, direction, and 1-minute chart, with a yellow circle around the entry candle.

3) Post-exit (longest processing, just one post)
Ideas on what went right and what went wrong, and 1-minute chart, with yellow circle around the entry and exit.

 

[Yamato]

I don't like this. I think it will go down soon.

 

[Yamato]

Pre-entry

Let's pretend I still wanted to go LONG, regardless.

1) you haven't lost over 250 dollars for the day (from discretionary trading)
2) the 225-period ma is in favor by at least 5 ticks
3) the 15-period ma gets crossed by price (in favor) after touching the other side >= 3 minutes
4) your entry and your take profit are >=10 ticks away from any pivot lines

 

[Yamato]

Pre-entry LONG

1) you haven't lost over 250 dollars for the day (from discretionary trading)
2) the 225-period ma is in favor by at least 5 ticks
3) the 15-period ma gets crossed by price (in favor) after touching the other side >= 3 minutes
4) your entry and your take profit are >=10 ticks away from any pivot lines