Nowler's Trading Journal

[Dowser]

The MACD is normally calculated from the value of the bar's close. If a bar is still 'in play' the current price is used in the calculation, which is why it moves around!

I use Prorealtime for charting and this gives me the option of where to take the value from. If I set an indicator to use the value from the open of a bar, rather than the close, the indicator will always appear stationary. See repainting vs non-repainting indicators.

 

[Fill_Or_Kill]

So what would be the lower limit of performance which would still be reasonable in terms of a prop firm hiring me? Keeping in mind my only third level education is a Bachelor's in Psychology.

I understand that it would be difficult to say and they would also be looking for level headedness etc... but lets just say a middle of the line prop firm...

Open props are in a right state atm, especially this side of the Atlantic. By the time you're ready there may have been some recovery in this space... or there may be an even bigger void. Over here a lot of them were trading STIRs using market profile... this edge was easy enough to take over algorithmically and since that happened, most have disappeared. The remnants tend to be quant based props. Optiver... Jane Street... Mandara. Actually Mandara have a record of hiring randoms outside of the Oxbridge standards, might be worth a punt a few years down the line. From what I've heard about them they sound properly odd, heart rate monitors and all sorts.

To say you're getting into trading at a tough time for newbies is putting it mildly. The years of proprietary trading IBs hiring guys they like down the pub are dead as disco. But, record first, career worries second.

 

[Nowler]

The MACD is normally calculated from the value of the bar's close. If a bar is still 'in play' the current price is used in the calculation, which is why it moves around!

I use Prorealtime for charting and this gives me the option of where to take the value from. If I set an indicator to use the value from the open of a bar, rather than the close, the indicator will always appear stationary. See repainting vs non-repainting indicators.

Useful to know.
Thanks

Open props are in a right state atm, especially this side of the Atlantic. ... The remnants tend to be quant based props. Optiver... Jane Street... Mandara. Actually Mandara have a record of hiring randoms outside of the Oxbridge standards, might be worth a punt a few years down the line. From what I've heard about them they sound properly odd, heart rate monitors and all sorts.

To say you're getting into trading at a tough time for newbies is putting it mildly. The years of proprietary trading IBs hiring guys they like down the pub are dead as disco. But, record first, career worries second.

On this topic... must I be good at math in order to prop trade?
I can add and subtract but apart from just basic stuff like dividing/multiplying by 2 or giving rough estimates for percentages that's it! If something is very important that I get it accurate then I am never more than a reach from a calculator (phone, tablet, computer, actual calculator )

I saw Lex van Dam on that documentary "Million Dollar Traders" ask applicants some math in the interview and I wouldn't be able to work it out without a calculator (or a minute or 2 and still likely be a few off). This whole trading to make a record in the hopes I get hired by a prop firm is only a new consideration. My initial intent was to go it alone and use elevated but careful risks in the beginning and lower it as capital increases. I would be devastated if I was to work my ass off like I am and get my hopes up about getting a job, only to be rejected because I am not very good at math...

That would suck!

 

[Brumby]

I cannot remember the exact reason for getting into the trade as I don't always write my trades down but for the most part my reason for going short on the AUD/USD was price action. As per the attachment to this post; you can see where I sold in and to the left of that again was the high that I didnt think it would go beyond. After the bullishness of the USD last week, I expected the USD to pull on against the AUD, I still do actually but perhaps I was too rash jumping on that trade when I did. Perhaps I should have waited for some US economic release...

Every trade we take is a teaching moment and if we don't learn from it then even a winning trade is a loss because being rewarded by bad practises just reinforce bad discipline. That price will eventually be paid but at a higher cost. Should you learn from it then that loss is an investment. A trader becomes better because it makes less and less mistakes. Trade opportunities are ephemeral and as a trader you need to develop your trading process because it is the process that eventually delivers you consistency. If you don't have a discipline process you will drown.

Having said that let's review what improvements can be made in your trading process.

I cannot remember the exact reason for getting into the trade as I don't always write my trades

That is your immediate problem. You don't have a trade plan. You have some idea of why you are taking the trade but the key question you need to address is the premise of your trade. You need to develop a discipline to write down your trade plan before you execute your trade to avoid post trade execution bias. That should be part of your trade evaluation process.

my reason for going short on the AUD/USD was price action. As per the attachment to this post; you can see where I sold in and to the left of that again was the high that I didnt think it would go beyond.

I can understand how you have identified immediate resistance and hence the price level for protective stop placement. This is however different to price action assessment to go short on a trade. What was it?

After the bullishness of the USD last week, I expected the USD to pull on against the AUD, I still do actually but perhaps I was too rash jumping on that trade when I did. Perhaps I should have waited for some US economic release...

I also did a little reading and from what I gathered, the US could very well raise their interest rates soon but the Aussies, while their next bank rate move might actually be an increase, I wouldn't be till 2018. That obviously wasn't the main reason I got into that trade. The price action was what reeled me in... the rest was confluence. In hindsight though, I think I should have closed that trade before the AUD release. I am typically in and out of a trade in a few hours. That on the other hand was placed Sunday night GMT when the Aussies were starting their Monday 8am session. I feel I should stop doing this and wait till at least 8am GMT when the London folk are on.

Having a view of USD bullishness might be an informed opinion but what you need to understand is to learn how to integrate this type of information into your trading methodology in making a trade decision. I too share the view that there is bullish sentiment on the USD as currently the market has a 80 % probability rating that the US will hike interest rate in Nov. There will always be a range of conflicting economic data and prices will ebb and flow. The challenge is learning to navigate through the mine field. This kind of skills can take a long time to develop.

I wouldn't have used just the 1hr for making the decision. I would have been going between the 5min, 15min, 30min, 1hr and 4hr.

I also use multi time frames but there are very specific purpose of use. You need to sort this out in your trade evaluation process. The issue is not the "use" but "how it is use". Which time frame did you use for the trade decision? Is this consistent with your other trade decisions? Was it a problem in this particular trade?

I'm a bit embarrassed to say that I'm not actually sure how the MACD works.
I understand what it stands for but personally when I use it, I am looking to see if the momentum is with me (that the histogram bars are increasing and on the side of the zero line that the trend/trade is going). Again, I am unsure if i'm using it right, but I would also like the MA lines of the MACD to be jumping the zero line also. To me that would indicate a higher probability of success. Am I using this wrong?

EDIT: I am kinda aware that if the price makes a higher high but the histogram of the MACD doesnt, then this is divergence? And the price is likely to fall? The opposite is true for the other way around?

As I said before on the use of indicators, if you want to use it then you need to know how to use it properly. With indicators, there are trade conditions when it is problematic to rely on it. You need to know what they are.

I need training!

Read Technical analysis for the trade professionals by Constance Brown. There is an entire chapter devoted to how to use oscillators in trading. You will find all the discussions on bullish, bearish, negative and positive divergences.

I am a blank slate with nothing tying me down... I am willing and ready to plough hours and hours into learning how to trade correctly...I just need to find that opportunity to gain some form for training or a mentor. Being self-taught is nice, but often I am doubting myself on whether I am learning the right things, or learning them the right way.

It is why I have said previously to you it take years to develop the necessary skills.

I am literally ready to move at a moments notice if the opportunity arises

This is the number one psychological problem for all traders. The fear of missing out. It is the fear that if you don't take the trade you would have missed out on a major opportunity. So they jump in and is basically reactionary to immediate price action development. Remember in trading it is to plan the trade and then trade the plan. A simple statement but fundamentally all the problems that a trader will ever face or have to deal with in his or her trading career is found in that statement.

 

[mpups]

good morning all in the Nowler thread! its an interesting and helpful one cheers guys.

nowler, to answer your question about drawdown (if i understand correctly)..

Max drawdown is the max amount the equity curve fell from its greatest height during the time period, so in your case its the the amount fallen away from the small gain? you achieved in the beginning because you have not surpassed this level yet.

When you make a new high in equity, i.e. make back all your losses and more, then the drawdown will be measured from this new high, and so on.

Dont pressure yourself to make back all your money asap, you are losing tiny amounts to learn which is fine. Once youre confident you have an edge, you can gradually increase size and then initial losses will be made back relatively quicker (in theory)

 

[Quantt]

That is your immediate problem. You don't have a trade plan. You have some idea of why you are taking the trade but the key question you need to address is the premise of your trade. You need to develop a discipline to write down your trade plan before you execute your trade to avoid post trade execution bias. That should be part of your trade evaluation process.

This is gold!

Nowler, I hope you are reading this and taking notes.

 

[Quantt]

I need training!
I am a blank slate with nothing tying me down... I am willing and ready to plough hours and hours into learning how to trade correctly...I just need to find that opportunity to gain some form for training or a mentor. Being self-taught is nice, but often I am doubting myself on whether I am learning the right things, or learning them the right way.

That is the beauty and the curse of trading, you'll have to be self-taught or you are risking falling a victim to the scammers and losing it all... Just think about it, if you have a constant winning system, would you write about it and sell it for few thousand dollars? even worst with mentors: they would never teach you a working trading system, but I bet if you find one and share it with your "trading coach", he will trade it himself while discourage you and made you dismiss it and you might never realize you had the edge all along...

 

[Nowler]

Every trade we take is a teaching moment and if we don't learn from it then even a winning trade is a loss because being rewarded by bad practises just reinforce bad discipline. That price will eventually be paid but at a higher cost. Should you learn from it then that loss is an investment. A trader becomes better because it makes less and less mistakes. Trade opportunities are ephemeral and as a trader you need to develop your trading process because it is the process that eventually delivers you consistency. If you don't have a discipline process you will drown.

I will try again to write them all down in future. What I was doing lately was just writing down a handful of trades every week or 2. If I wanted to look back at my trading history for clues or whatever, then those handfuls of written trades each 1 or 2 weeks (samples of the population- statistics) should suffice in identifying a pattern of issues... I don't use that many different forms of analysis, so I don't see much of a problem doing this. But, i'll try write them all.

Even if I don't write my trades down, I still learn from them. I only started writing trades down about a month ago. Clearly I was learning lessons before that point, so basically what I am saying is one doesn't fail to learn anything just because they didn't write the trade down. Getting into a trade based on nothing other than feeling on the other hand would be wasteful because, to quote you, "even a winning trade is a loss because being rewarded by bad practises just reinforce bad discipline". Note: I do realise that I have only started to make money back in the last month, and that this is around the time that I started to write things down. This could be the reason that my account seems to be turning around...or it could just be a coincidence or simply due to the fact that I am bound to see significant changes in success early on because I am going from someone who knew nothing about it to someone who knows at least something about it. At the same time, I wrote down trades at the start of that month but I was also making money back when I wasn't writing them down too. I need more data in order to make a call on this.

That is your immediate problem. You don't have a trade plan. You have some idea of why you are taking the trade but the key question you need to address is the premise of your trade. You need to develop a discipline to write down your trade plan before you execute your trade to avoid post trade execution bias. That should be part of your trade evaluation process.

I can understand how you have identified immediate resistance and hence the price level for protective stop placement. This is however different to price action assessment to go short on a trade. What was it?

This right here sets off the alarm bells for me.
A trade plan?...what do you mean by this? I am not a purely systematic trader. In fact, if I was made become a purely systematic trader then I would probably pack in all in. That would bore the life out of me! And for me to put exceptional effort into something, I must enjoy it.

Perhaps my understanding of this is a little off, but when I say a purely systematic trader what I am referring to is one of these people that has 1 setup and then aims to find that 1 set up in the market. If that set up isn't found then they do not trade. While if they are happy to do this, then more power to them, but I have absolutely zero intentions of pigeon holing myself like that. I come from a construction background and not once did we ever turn up to a job with 1 tool. I want to be able to look at a handful of charts and be able to identify different set ups, all of which I am experienced in using.

I would also like to draw attention to my equity curve.
Clearly something different is going on in recent times... perhaps it's luck, perhaps it's the development of skill... Either way, to change too much too soon is not what I was thought in Uni when carrying out experiments. If I change any more than 1 variable at a time, then how can I tell which variable made the difference? Maybe it is luck this last month...maybe the markets were extra kind during that period, but maybe it wasn't.

At this stage I just want to point out my dyslexia again.
The last time I checked, about 5-10% of the population were dyslexic. I am not wired the same as 90-95% of you, so following a hard set path developed by people who do not think or act like me naturally raises a red flag. One thing that stood out during my test for this was my elevated ability with patterns and abstract thinking, including mental rotation of objects. I am not saying that my path to "trading success" requires me to follow a totally different path to most of you or that it means that I get to follow completely different rules... what I am saying is that unless you (collective you) are dyslexic, then my path will not be even close to being a carbon copy of yours (collective yours). Without a doubt there will be a lot of things that we will both abide by, but there will still be a significant difference.

I cannot know everything related to a trade I am about to make, nor am I attempting to know it all. What I am doing is very simple... I accept that I will not always be right. Even when there is overwhelming evidence for 1 direction, it could very well go the other way regardless. My objective is to skew the probability in my favour. I try to figure out where the pressure is and then I trade with that pressure. At least that's what I am attempting/trying to develop. So I look at interest rates and inflation and try to figure out where the pressure is there between two currencies. Once I know where that pressure is, I look for set ups to that direction. Simple! Obviously apart from practicing this, the real hard part is the psychology!

Having a view of USD bullishness might be an informed opinion but what you need to understand is to learn how to integrate this type of information into your trading methodology in making a trade decision. I too share the view that there is bullish sentiment on the USD as currently the market has a 80 % probability rating that the US will hike interest rate in Nov. There will always be a range of conflicting economic data and prices will ebb and flow. The challenge is learning to navigate through the minefield. This kind of skills can take a long time to develop.

I also use multi time frames but there are very specific purpose of use. You need to sort this out in your trade evaluation process. The issue is not the "use" but "how it is use". Which time frame did you use for the trade decision? Is this consistent with your other trade decisions? Was it a problem in this particular trade?

As I said before on the use of indicators, if you want to use it then you need to know how to use it properly. With indicators, there are trade conditions when it is problematic to rely on it. You need to know what they are.

I agree with this and yes, it will take time. I need to carry on analysing and doing post mortems, seeing what does and doesn't work for me. I will continue to listen to the suggestions/advice from others... considering it and letting go of what doesn't fit. All I can ultimately do is try to remain as objective as I can and also realise that at times others will see things that I cannot.

Read Technical analysis for the trade professionals by Constance Brown. There is an entire chapter devoted to how to use oscillators in trading. You will find all the discussions on bullish, bearish, negative and positive divergences.

Thank you very much for that. And all of this for that matter! Even if I disagree with something you say, it will at least make me think about it in order to come to my conclusion. And you're doing this for free! So please know that I appreciate it immensely!

This is the number one psychological problem for all traders. The fear of missing out. It is the fear that if you don't take the trade you would have missed out on a major opportunity. So they jump in and is basically reactionary to immediate price action development. Remember in trading it is to plan the trade and then trade the plan. A simple statement but fundamentally all the problems that a trader will ever face or have to deal with in his or her trading career is found in that statement.

When I said this I was referring to me being ready to physically move at a moments notice. As in, if an opportunity popped up with a firm or whatever in another country, then I am ready to go. I was not referring to the execution of a trade

 

[Nowler]

good morning all in the Nowler thread! its an interesting and helpful one cheers guys.

nowler, to answer your question about drawdown (if i understand correctly)..

Max drawdown is the max amount the equity curve fell from its greatest height during the time period, so in your case its the the amount fallen away from the small gain? you achieved in the beginning because you have not surpassed this level yet.

When you make a new high in equity, i.e. make back all your losses and more, then the drawdown will be measured from this new high, and so on.

Dont pressure yourself to make back all your money asap, you are losing tiny amounts to learn which is fine. Once youre confident you have an edge, you can gradually increase size and then initial losses will be made back relatively quicker (in theory)

Thanks for that mate.
I posted a question about my drawdown yesterday but as soon as I hit send, I twigged it and no longer needed to ask the question, so deleted it. I will continue to try bring it back to an acceptable level but i'll remain optimistic because a lot of that drawdown came in the first 3 months. Of course I was going to have drawdown then. Now the plan is to bring it back, bit by bit. I'll add drawdown as part of my month 5 targets.

 

[Nowler]

This is gold!

Nowler, I hope you are reading this and taking notes.

I sure am!
I was actually wondering the other day how many people realised the quality of what's being said in this thread.

While I am "talking everything with a pinch of salt", as must be done on forums, I have however been shown gaping holes in my game. I have learned a lot from some of the things that have been said here.

That is the beauty and the curse of trading, you'll have to be self-taught or you are risking falling a victim to the scammers and losing it all... Just think about it, if you have a constant winning system, would you write about it and sell it for few thousand dollars? even worst with mentors: they would never teach you a working trading system, but I bet if you find one and share it with your "trading coach", he will trade it himself while discourage you and made you dismiss it and you might never realize you had the edge all along...

Agreed!
I do like being self-taught, in the sense that I decided what to accept and disregard based on my own analysis but some times I just want someone to instill some confidence that I am doing the right thing, or to point out what I'm doing wrong. I know all of this is subjective... and I am effectively getting that from some of you. It's not a traditional mentor type thing, but some of you are really making me think... so I guess I am in fact availing of a mentor, in a sense

 

[Fill_Or_Kill]

This right here sets off the alarm bells for me.
A trade plan?...what do you mean by this? I am not a purely systematic trader. In fact, if I was made become a purely systematic trader then I would probably pack in all in. That would bore the life out of me! And for me to put exceptional effort into something, I must enjoy it.

Successful trading in of itself is extremely boring, though the things it can lead to are not.

Seat of your pants stuff kind of died with the pits I'm sorry to say. Maybe it still exists trading small cap US equities in the morning and that's about it. Definitely not in the liquid monster that is FX. Don't know what to tell you it feels like we're a bunch of dream killers in here.

 

[piphoe]

Successful trading in of itself is extremely boring, though the things it can lead to are not.

Seat of your pants stuff kind of died with the pits I'm sorry to say. Maybe it still exists trading small cap US equities in the morning and that's about it. Definitely not in the liquid monster that is FX. Don't know what to tell you it feels like we're a bunch of dream killers in here.

What do you mean when you say "Seat of your pants stuff kind of died with the pits"?

Do you mean retail looking at a chart and trading successfully? Do you mean nothing is successful now unless it is "hard quantitative"??

Or, maybe you mean something else entirely?

 

[Nowler]

Successful trading in of itself is extremely boring, though the things it can lead to are not.

Seat of your pants stuff kind of died with the pits I'm sorry to say. Maybe it still exists trading small cap US equities in the morning and that's about it. Definitely not in the liquid monster that is FX. Don't know what to tell you it feels like we're a bunch of dream killers in here.

Ah no.
I don't need seat of my pants excitement.
I just don't want to be bored all the time.
Thankfully, I find excitement in being wrong, which there will be no shortage of in trading So the excitement of being beaten and having to reevaluate in order to come back for your pound of flesh will not leave unless I simply stop finding it exciting. I also love to be right! So when trades go right for me, I feel great and far from bored. The market is an extension of human behaviour, and in pure human style there will inherently be patterns, ergo, chart patterns for me to capitalise on. I don't think I would have gotten into trading if I didn't complete a degree in psychology. I was a bit upset that I put all that work into my degree only to be faced with the reality of not being able to afford to pursue it further... then I realised that I could apply what I learned to the financial markets

 

[piphoe]

Ah no.
I don't need seat of my pants excitement.
I just don't want to be bored all the time.
Thankfully, I find excitement in being wrong, which there will be no shortage of in trading So the excitement of being beaten and having to reevaluate in order to come back for your pound of flesh will not leave unless I simply stop finding it exciting. I also love to be right! So when trades go right for me, I feel great and far from bored. The market is an extension of human behaviour, and in pure human style there will inherently be patterns, ergo, chart patterns for me to capitalise on. I don't think I would have gotten into trading if I didn't complete a degree in psychology. I was a bit upset that I put all that work into my degree only to be faced with the reality of not being able to afford to pursue it further... then I realised that I could apply what I learned to the financial markets

This sounds like to me the challenge or the "game" is more important than the money? That you are reveling in the "fight" but the outcome (profitability) is well might bea bit boring once you conquered. I'm not sure thats a healthy way of approaching the market.

I'm probably wrong, just my sense from your last reply.

 

[Nowler]

This sounds like to me the challenge or the "game" is more important than the money? I'm not sure thats a healthy way of approaching the market.

Bettering the quality of life for my mother, her partner, my brother and 2 sisters is my priority. Obviously for myself too but if I can achieve it for them then it will also have been achieved for myself too by proxy. After that I would like to extend this beyond my family. I have been to Sri Lanka as a mental health volunteer and it just stoked the fire. I am hyper-critical of so many things in the world and before I would just give out about it and that's it. Then I realised that change starts at home. So to help as much as I can is now one of my life goals.

Enjoying what I do is also very important to me. I am an all in or all out kind of person. Not in the sense that I am going to risk all my capital on something, but rather that I am either going to do something properly (how I perceive "properly") or I'm not going to do it at all. This frustrates many people around me all the time I can only for a very limited time do something which I dislike. Unless I have no other choice of course lol

So in sum, I am looking to keep as much excitement in this as possible but I am also grounded by the lives of my family. Which I think is a very good motivator not to fk up! Wouldn't you agree?

 

[piphoe]

Very noble cause Nowler, best wishes.

 

[Nowler]

Very noble cause Nowler, best wishes.

Thanks.
If it works it works... If it doesn't then at least I tried.

Keep up the awesome advice/suggestions though folks!

 

[Fill_Or_Kill]

What do you mean when you say "Seat of your pants stuff kind of died with the pits"?

Do you mean retail looking at a chart and trading successfully? Do you mean nothing is successful now unless it is "hard quantitative"??

Or, maybe you mean something else entirely?

Not necessarily, I mean these days if you're trading in a high pressure environment, elevated heart rate, cortisol levels through the roof, uncertain - unlikely you have a long term edge. The only people I know who do this in the modern day and making money are trading penny equities. Everyone else who matters is either a PM (eurgh) or a quant. The sweaty manual daytrader cranking out 100 trades a day and finishing up each week is a modern day myth, ridden on the back of when it used to be possible to spread trade Bunds and 10 yrs post LIFFE many times a day. Or the SOES bandits if you're American. Daytrading outrights for a weekly profit - something rarer than hen's teeth.

Riding orders has a certain adrenaline kick to it because it's like getting away with free cash. You can't do that any more really so you shouldn't be getting rushes of adrenaline. Every edge has to be a practised one and should be tedious.

To say this industry is done for your average Joe to make his mark is understating it and I'm very sorry to see it.

 

[Quantt]

Agreed!
I do like being self-taught, in the sense that I decided what to accept and disregard based on my own analysis but some times I just want someone to instill some confidence that I am doing the right thing, or to point out what I'm doing wrong. I know all of this is subjective... and I am effectively getting that from some of you. It's not a traditional mentor type thing, but some of you are really making me think... so I guess I am in fact availing of a mentor, in a sense

Good stuff... just never forget this is a 0 sum game (even bellow zero when counting the commissions, data feeds and other expenses) and we are fierce competitors going at each other all the time...

 

[piphoe]

To say this industry is done for your average Joe to make his mark is understating it and I'm very sorry to see it.

and blame this on the rise of the machines, algos and "location" read ping time right?

it was an inevitable consequence though, of progress so where are the edges now for retail iyo? longer TF's??